A  History  of  the  General 
Property  Tax  in  Illinois 


BY 


ROBERT  MURRAY  HAIG,  A.B..  M-A. 


Submitted  ix  Partial  Fulfilment  of  the  Requirements 
FOR  THE  Degree  of  Doctor  of  Philosophy 

IN  the 

Faculty  of  Political  Science 
in  Columbia  Unwersity 


W4 


riiAjriQAN -PEARSON  OOUPANT 
PBnmKS   <l<j^^tfete     BINDXRS 

Champaign,  Illinois. 


Copyright,  1914 
By  the  University  of  Illinois 


PREFACE 

This  study  found  its  inception  in  the  seminar  of  Dean 
David  Kinley,  of  the  University  of  Illinois,  during  the 
winter  of  1908-1909.  The  seminar  that  year  devoted  its 
attention  to  the  subject  of  taxation  in  the  state  in  antici- 
pation of  the  movement  for  the  revision  of  the  tax  system 
which  culminated  in  the  appointment  of  the  special  tax 
commission  of  1910.  Considerable  material,  gathered  by 
the  members  of  the  seminar,  dealing  particularly  with  the 
present  day  situation,  has  been  made  available  for  this 
undertaking;  and  acknowledgment  is  made  in  this  special 
manner  to  Dr.  A.  E.  Swanson,  Dr.  E.  J.  Brown,  Mr.  T.  E. 
Latimer  and  Mr.  J.  R.  Moore  for  the  assistance  afforded 
by  their  seminar  studies.  Moreover,  material  on  various 
phases  of  the  subject  gathered  by  Professor  M.  B.  Ham- 
mond, of  the  Ohio  State  University,  and  by  Professor  Na- 
than A.  Weston,  of  the  University  of  Illinois,  was  also  very 
kindly  contributed  by  them  and  was  of  no  slight  aid  in  the 
work.  For  this  generous  cooperation  I  desire  to  render 
my  thanks. 

While  the  library  of  the  University  of  Illinois  was 
found  to  be  rich  in  material,  considerable  use  was  made  of 
other  libraries.  The  collection  of  early  state  documents  in 
the  State  Historical  Library  at  Springfield,  Illinois,  was 
particularly  valuable.  Material  was  gathered  also  in  the 
New  York  Public  Library,  the  Indiana  State  Library,  the 
Library  of  Congress,  the  Illinois  State  Library  and  the 
Columbia  University  Library.  Thanks  are  due  to  the  oflB- 
cers  of  these  institutions  for  many  courtesies  extended.  I 
am  particularly  indebted  to  j^he  custodian  of  the  public 
documents  in  the  ofllce  of  the  secretary  of  state  at  Spring- 
field, for  access  to  the  manuscripts  of  the  unpublished 
territorial  laws,  and  to  the  auditor  of  public  accounts,  for 
access  to  the  original  account  books  of  the  state  for  the 


*im=ifirHJk 


4  HISTORY  OF  TAXATION  IN  ILLINOIS  [4 

early  years  of  its  history.  For  criticism  of  the  manuscript 
and  for  suggestions  as  to  the  use  of  material,  I  desire  to 
thank  Professor  E.  R.  A.  Seligman,  Dean  David  Kinley, 
Professor  C.  W.  Alvord,  Professor  J.  A.  Fairlie,  Professor 
E.  L.  Bogart,  Professor  G.  W.  Dowrie  and  Professor  H.  B. 
Gardner.  Acknowledgment  is  made  of  financial  assistance 
rendered  by  the  Carnegie  Institution  of  Washington, 
Finally  I  wish  to  record  my  deep  gratitude  to  my  wife, 
whose  aid  has  been  invaluable. 

Robert  M.  Hakj. 
New  York  City, 

March  2,  1914. 


CONTENTS 

A.    PRE-TERRITORIAL  ORIGINS 

Chapter' I 

Page 

Origins  of  the  General  Property  Tax  in  Illinois 9-24 

The  French  Period,  1669-1763 9 

The  English  Period,  1 763-1778 il 

The  Count>'  of  Illinois,  1778-1784 „ 11 

The  Northwest  Territory,  1784-1800 12 

The  Territory  of  Indiana,  1800-1809. 20 

Summary  23 

B.    THE  FORMATIVE  PERIOD,  1869-1838 

Chapter  II 

Economic  Characteristics  and  the  Financial  Problem •  25-34 

The  Sphere  of  State  Activity „ „ 26 

Taxable  Capacity  of  the  People 27 

The  Agreement  with  the  United  States   Government •     29 

The  Failure  of  the  First  Banking  Venture 31 

The  Financial  Problem  in  General 33 

Chapter  III 

Legislation,  1809-1838  35-58 

Property  Taxed  and  Rates  Imposed 36 

Assessment  Methods  44 

Collection  Methods  _ 49 

Special  County  Levies  and  Municipal  Taxes „ 51 

Summary  57 

Chapter  IV 

Efficiency  of  the  Tax  System 59-73 

Fiscal  Results  59 

Administrative  Results  „ „  68 

C    THE  DEBT-PAYMENT  PERIOD,  1839-1872 

Chapter  V 

Taxation  for  Debt  Payment,  1839-1848 74-92 

The  State  Debt  and  the  Tax  Problem 74 

Tax  Law  of  1839. „ 78 

The  First  Interest  Tax .1 , 83 

Economic  Depression  85 

Changes  in  the  Tax  Laws  and  the  Canal  Loan „ : 88 

Improved  Outlook  91 

5 


Chapter  Vt 

Taxation  for  Debt  Payment  (continued),  1848-1872 93-125 

The  Constitution  of  1848 93 

The  Revenue  Code  of  1853 99 

Financial  Conditions  103 

The  State  Debt  and  Interest  Funds 106 

The  Illinois  Central  Payments 108 

Summary  of  the  Sources  of  Debt  Payment 109 

Finances  During  the  Civil  War m 

The  State  Board  of  Equalization 113 

Computation  of  the  Tax  Rate ii4 

Debt    Payment,    1864-1872 115 

Taxation  of  Corporations 117 

Taxation  for  Roads  and  Schools 119 

Summary  and  Criticism 120 

D.     PRESENT-DAY  PERIOD,  1872-1913 
Chapter  VII 

Taxable  Property  in  General  and  its  Assessment 126-137 

Constitutional  Provisions  127 

Property  Taxed  and  Exempted 128 

Assessment  Methods 132 

State  and  Local  Officials 132 

Valuation  of  Property I33 

Local  Assessors  I34 

Return  of  Assessment  Lists I37 

Publication  of  Assessments I37 

Chapter  VIII 
The  Assessment  of  Personal  Property 138-165 

The  Process  of  Assessment 138 

Definitions   and   Deductions 138 

Manner  of   Listing : 141 

Oaths  and  Penalties _ I43 

Efficiency  of  the  Personal  Property  Assessment 144 

Mortgages  and  Credits „ 146 

Bankers'  Credits  I53 

Tangible  Personalty  160 

Money  161 

Chapter  IX 

The  Assessment  of  Real  Estate 166-172 

Definition  of  Real  Estate 166 

Manner  of  Listing 166 

Undervaluation 167 

Inequality   169 

Recommendations  171 

6 


Chapter  X 

Page 
Review,  Equalization,  Extension  and  Collection 173-199 

Review   and    Equalization _ 173 

County  Board  of  Review 173 

State  Board  of  Equalization 176 

Extension  of  Taxes 180 

The  State  Tax 180 

Local  Rates  183 

The  Juul  Law 189 

Collection  of  Taxes 194 

Collectors    194 

Collections  and  Settlements 195 

Tax  Lien  and  Tax  Sales 196 

Redemption  198 

Property  Forfeited  to  the  State 198 

Chapter  XI 

The  Taxation  of  Corporations 200-216 

The  Corporate  Excess  Plan 200 

Corporations  Subject  to  State  Assessment 200 

Assessment  Methods  202 

Efficiency  of  Assessments 203 

Teachers'   Federation   Case 206 

Railroads   209 

Telegraph  Companies  212 

Banks  212 

Insurance  Companies 214 

Chapter  XII 

Summary  and  Conclusions 217-228 

Early  Success  _ 217 

Present  Defects  „ 218 

The  Necessity  of  Reform 219 

Suggested  Reforms  224 

Bibliography  229 

7 


TABLES  IN  TEXT 

1.  Receipts   into   the   State   Treasury   from   the   Tax   on   Property, 

1820-1838   61 

2.  Receipts  into  the  State  Treasury  from  the  the  Tax  on  the  Prop- 

erty of  Non-Residents  and  the  Percentage  formed  by  them 
of  the  Total  Receipts  from  the  Property  Tax,  1820-1838 62 

3.  Total  Ordinary  Receipts  into  the  State  Treasury  and  the  Per- 

centage   formed   by   the    Receipts    from    the    Property   Tax, 
1820-1838   63 

4.  Total   Receipts  and  Expenditures   of  the   State  Treasury,   1818- 

1838    64 

5.  Estimates  of  the  State  Debt  at  the  Time  of  the  Suspension  of 

Specie  Payments  n 

6.  Statement  of  the  State  Debt  Fund 107 

7.  Revenue   from  the  Tax   on  the  Gross   Earnings  of  the  Illinois 

Central  Railroad 109 

8.  Local   Assessments,   1839-1872 122 

9.  State  Tax  Rates,  1839-1872 , 123 

10.  Assessed    Value    of    Credits,    Not    Including    Bankers'    Credits, 

1875-1912    147 

11.  Comparison  of   Cook  County  with  the  Remainder  of  the  State 

in  Respect  to  the  Assessed  Value  of  Credits.  Not  Including 
Bankers'  Credits,  1873-1912 149 

12.  Taxable  Mortgages  in  1880  and  1887  in  Cook  County  and  in  the 

Entire  State  '. iSo 

13.  Assessed  Value  of  Bankers'  Credits,  1875-1912 I54 

14.  Calculation  of  the  Net  Taxable  Credits  of  the  State  Banks  of 

Chicago  on  June  5,  1893 I5S 

15.  Calculation  of  the  Net  Taxable  Credits  of  the  State  Banks  of 

Cook  County  on  April  27,  1900. I59 

16.  Assessed    Value   of    Moneys,    Not    Including   Bankers*   Moneys, 

1875-1913   162 

17.  Comparison  of  Individual  Bank  Deposits  with  Assessed  Values 

of  Moneys,  Not  Including  Bankers'  Moneys,  1889-1912 164 

18.  Assessments  of  Corporate  Excess  by  the  State  Board  of  Equali- 

zation,  1873-1912  205 

19.  Total  Equalized  Assessment  of  Railroads,  1873-1912 211 

8 


A.     PRE-TERRITORIAL  ORIGINS 


CHAPTER  I. 

Origins  of  the  General  Property  Tax  in  Illinois. 

The  organization  of  Illinois  as  a  territory  in  1809 
involved  no  radical  change  in  the  character  of  the  existing 
institutions.  Xo  new  code  of  law  was  substituted  for  the 
one  in  force  in  the  territory  when  the  change  in  the  form 
of  government  was  made.  On  the  contrary,  the  old  code 
was  carried  over  in  its  entirety  and  used  as  the  basis  for  the 
new,  subject  to  such  modifications  and  changes  as  were 
deemed  appropriate  by  the  territorial  legislature.^  The 
system  of  raising  public  revenues  by  levying  a  tax  upon 
property  according  to  its  value  was  one  of  the  inheritances 
received  by  the  new  government  from  the  old.  Conse- 
quently one  must  look  to  the  pre-territorial  legislation  for 
the  primary  sources  of  the  general  property  tax  system  in 
the  state. 

The  pre-territorial  history  of  Illinois  is  the  history  of 
a  small  group  of  French  settlements,  established  about 
1700,  which  led  an  unprogressive  life  for  nearly  a  hundred 
years  before  they  were  submerged  by  the  flood  of  settlers 
from  the  seaboard  states  after  the  close  of  the  Revolution. 
The  political  control  over  this  group  of  settlements  was 
subject  to  frequent  change  during  the  century,  passing  suc- 
cessively from  France  to  England,  from  England  to  the 
State  of  Virginia,  and  from  Virginia  to  the  United  States. 

The  French  Period,  1699-1763. 
The   period   of  French   domination  began   with   the 
establishment  of  the  mission  stations  of  Kaskaskia  and 
Cahokia  as  outposts  of  the  great  French  empire  in  the 

^Laws  of  the  Territory  of  Illinois,  1809-1811,  p.  i;  Laws  of  Illinois 
Territory,  1812,  p.  5. 

9 


10  HISTORY  OF  TAXATION  IN  ILLINOIS  [10 

Mississippi  valley,  which  had  been  the  dream  of  Colbert, 
the  minister  of  Louis  XIV.^  It  closed  at  the  end  of  the 
Seven  Years'  War,  in  1763,  when  France  was  forced  to 
cede  her  claims  to  the  region  to  England.^  In  so  far  as  any 
direct  bearing  on  the  problem  in  hand  is  concerned,  the 
period  during  whicli  the  settlements  were  under  the  con- 
trol of  the  French  is  unimportant.  The  population  re- 
mained small,  probably  not  exceeding  two  thousand  persons 
at  any  time/  and  such  governmental  functions  as  were 
performed  seem  to  have  been  exercised  largely  through 
military  and  ecclesiastical  authorities.^  In  the  annals  of 
the  villages,  as  kept  by  the  parish  priests,  there  is  no  evi- 
dence of  the  levy  of  any  tax  or  of  the  existence  of  any 
formal  financial  system.® 


-C.  W.  Alvord,  "Illinois;  the  Origins",  Military  Tract  Papers  (Illinois 
State  Reformatory  Print),  no.  3,  p.  7.  The  French  settlement,  of  which 
these  two  villages  were  the  beginning,  was  situated  in  the  bottom  lands 
of  the  Mississippi  River,  in  the  south-western  part  of  Illinois.  Cahokia 
was  founded  in  1699  and  Kaskaskia  a  year  later. 

^The  actual  transfer  was  made  in  1765.    Illinois  Historical  Collections, 

II,    XXV. 

*Alvord,  Origins,  p.  9. 

°J.  B.  Dillon,  History  of  the  Early  Settlement  of  the  Northwestern 
Territory  (Indianapolis,  1854),  p.  60;  Joseph  Wallace,  History  of  Illinois 
and  Louisiana  under  the  French  Rule  (Cincinnati,  1893),  p.  309  et  seq.; 
E.  G.  Mason,  Kaskaskia  and  its  Parish  Records  (Fergus  Historical  Series, 
no.  12,  Chicago,  1881). 

«///.  Hist.  Coll.,  V;  Mason,  op.  cit. 

It  is  known  that  some  income  was  obtained  from  fines.  Thus,  in  one 
place  the  record  shows  that  a  fine  of  twenty-five  livrcs,  payable  in  deer 
skins,  was  imposed  upon  those  selling  liquor  to  savages  or  slaves.  It  was 
specified  that  the  proceeds  from  the  fines  should  go  for  the  support  of  the 
poor.  ///.  Hist.  Coll.,  V,  117.  Licenses  for  trade  were  issued  but  whether 
fees  were  charged  for  them  is  not  known.    Ibid,  II,  Ixviii. 

The  effect  of  the  early  French  settlement  upon  the  financial  system 
of  the  state  was  indeed  so  slight  that  one  might  remain  entirely  ignorant 
of  the  fact  that  there  had  been  any  early  settlement,  were  it  not  for  the 
legacy  of  some  land  title  disputes  and  for  the  common  fields  of  some  of 
the  villages  which  were  several  times  the  subject  of  legislative  attention  in 
later  years.  Art.  8,  Const,  of  1818;  Private  Laws,  1826-7,  p.  22;  Laws, 
1909,  p.  425. 


11]  ORIGINS  OF  THE  GENERAL  PROPERTY  TAX  11 

The  English  Period,  1763-1778. 

The  change  from  French  to  English  domination  seems 
to  have  been  accomplished  without  disturbing,  to  any  great 
extent,  the  local  customs  of  the  settlements.^  The  English 
supplied  a  military  government,  the  expenses  of  which 
were  provided  for  without  appeal  to  the  French  settlers.® 

The  County  of  Illinois,  1778-1784. 

A  similar  arrangement  was  continued  after  the  occu- 
pation of  the  region  in  1778  by  George  Rogers  Clark  in  the 
name  of  the  State  of  Virginia.  An  act  of  the  Virginia 
legislature  in  October,  1778,  provided  that  the  expenses 
of  the  military  government  and  of  those  officials  to  whom 
the  inhabitants  were  not  accustomed  should  be  paid  out  of 
the  state  treasury,  but  that  the  expenses  of  the  civil  govern- 
ment to  which  the  population  was  accustomed  should  be 
paid  in  the  same  manner  as  formerly.^  During  this  period 
an  independent  local  government  was  maintained  in  a  very 
efficient  form  in  Cahokia  and  in  a  less  efficient  form  in 
Kaskaskia^^;  but  the  sphere  of  governmental  activity  was 
small  and  the  cost  formed  no  problem.^^     The  record  book 


^Dillon,  op.  cit. 

^III.  Hist.  Coll.,  II,  XXV ;  Captain  Phillip  Pittman,  The  Present  State 
of  the  European  Settlements  on  the  Mississippi,  etc.  (London,  1770),  pp. 
43,  55- 

In  1768,  however,  the  English  did  establish,  at  Fort  Chartres,  one  of 
the  French  villages  founded  about  1720,  a  court  of  law  with  seven  judges. 
This  was  said  to  have  been  the  first  court  of  common  law  jurisdiction 
west  of  the  Allegheny  Mountains.  E.  G.  Mason,  Old  Fort  Chartres 
(Fergus  Historical  Series,  no.  12,  Chicago,  1881),  pp.  41,  42.  This  court 
proved  to  be  a  failure.  Alexander  Davidson  and  Bernard  Stuve,  History 
of  Illinois  (Springfield,  1874),  p.  165. 

»///.  Hist.  Coll.,  II,  Hi  et  seq.;  C.  E.  Boyd,  "The  County  of  Illinois," 
American  Historical  Review.  IV,  624. 

Another  act  specified  that  the  religion  and  customs  of  the  inhabitants 
were  to  be  respected.    Mason,  op.  cit.^  p.  49  et  seq. 

^^III.  Hist.  Coll.,  II,  Ixiii  et  seq.,  cxlvii  et  seq.;  Alvord,  Origins, 
p.  II  et  seq. 

^^III.  Hist.  Coll.,  II,  Introduction. 


12  HISTORY  OF  TAXATION  IN  ILLINOIS  [12 

of  Colonel  John  Todd,  the  first  county  lieutenant,  shows  no 
evidences  of  taxes  collected. 

It  is  true  that  the  inhabitants  were  sometimes  levied 
upon  for  supplies  for  military  purposes.  But  these  levies 
were  not  really  taxes,  for,  although  they  were  compulsory 
in  character,  the  contributors  were  to  be  reimbursed.^ ^  In 
form,  however,  they  were  very  similar  to  taxes.  The  record 
reads  that  "the  justices  of  the  court  of  Kaskaskia  assessed 
the  inhabitants  of  the  village  according  to  their  wealth,  and 
that  by  August  31,  (1779)  there  had  been  delivered  into 
the  store-house  54,600  pounds  of  flour . . .  "^^  In  Cahokia, 
also,  each  person  was  compelled  to  furnish  supplies  accord- 
ing to  his  means. ^*  For  a  large  proportion  of  the  people, 
the  levies  were  practically  taxes ;  the  supplies  were  not  paid 
for  until  years  later,  and  by  that  time  the  orders  had  passed 
out  of  the  hands  of  the  original  owners  for  the  most  part, 
many  of  them  having  been  sold  to  speculators  for  a  mere 
pittance. 

The  Northwest  Territory,  1784-1800. 
When  Virginia  resigned  her  claims  to  the  region  in 
favor  of  the  central  government,  in  1784,  a  different  kind 
of  history  began  in  the  Illinois  country.  For  a  little  time, 
it  is  true,  the  French  were  left  largely  to  their  own  de- 
vices ;  but  when  attention  did  begin  to  be  paid  to  them,  local 
institutions  were  no  longer  respected.  A  well  defined  at- 
tempt was  made  to  change  radically  their  system  of  local 
government  in  order  to  make  it  identical  with  that  of  the 
eastern  section  of  the  Northwest  Territory,  of  which  Illi- 
nois now  became  a  part.  Thus  the  history  of  Illinois  after 
1784  cannot  be  interpreted  in  the  same  manner  as  the  his- 
tory of  the  preceding  years.  It  is  no  longer  the  story  of  a 
succession  of  careless,  military  governments,  maintained 
from  some  far-away  treasury  by  an  authority  which  cared 
little  whether  the  inhabitants  made  use  of  a  particular 
form  of  local  government;  it  becomes  the  story  of  a  civil 

*2/W</.,  p.  Ixxvi. 
^^Ibid.,  p.  Ixxvii. 
^*Ibid.,  p.  Ixxxiii. 


13]  ORIGINS  OF  THE  GENERAL  PROPERTY  TAX  13 

gOYernment  seeking  to  organize,  in  thorough  manner  and 
according  to  a  uniform  plan,  a  Yery  large  district.  To  this 
gOYernment  there  arises  the  problem  of  so  changing  and 
molding  the  institutions  in  the  French  settlements  as  to 
make  them  conform  to  the  large  scheme  for  the  gOYernment 
of  the  entire  north-western  region. 

It  is  not  necessary  to  speak  in  detail  of  the  moYement 
of  population  from  the  eastern  states  to  the  region  north- 
west of  the  Ohio  RiYer,  which  began  in  real  earnest  soon 
after  the  KeYolution  and  continued  with  ever  increasing 
rapidity,  until  the  whole  territory  was  thickly  settled;  or 
of  how  the  region,  originally  organized  under  one  juris- 
diction, was  divided  time  and  again  into  independent,  self- 
sustaining  parts  until  the  present  arrangement  of  state 
boundaries  was  evolved.  It  is  important,  however,  to  recall 
this  much.  When  the  Northwest  Territory  was  first  di- 
vided, Ohio  was  formed.  The  remainder  was  called  the 
Territory  of  Indiana.  As  soon  as  the  region  embraced 
within  the  wide  boundaries  of  this  territory  had  developed 
strength  enough  to  undergo  the  operation,  further  divisions 
were  made  whereby  the  territories  of  Michigan  and  Illinois 
were  formed.  Such  divisions  and  adjustments  continued 
for  many  years;  the  boundaries  of  Illinois,  for  example, 
were  not  definitely  fixed  until  1840.  So  between  1784  and 
1809  the  settlements  in  the  Illinois  country  were  organ- 
ized successively  as  a  part  of  the  Northwest  Territory,  of 
the  Indiana  Territory,  and,  finally,  as  the  Territory  of 
Illinois. 

It  was  almost  inevitable  that  a  movement  such  as  this 
should  diminish  to  the  point  of  extinction  the  infiuence  of 
the  French  settlements  upon  the  institutions  and  customs 
of  the  country.  The  nature  of  the  process  of  organization 
made  any  other  result  almost  an  impossibility.  Through 
the  early  period  of  Northwest  Territorial  government,  these 
far  western  settlements  were  ignored.  Indeed  they  had  no 
effective  representation  in  the  law-making  bodies  of  the 
territorial  governments  until  1805.^^     The  first  attempts 

^'Shadrach  Bond  was  the  representative  of  Knox  County  in  the  legis- 
lative assembly  of  the  Northwest  Territory  in  1798.  J.  B.  Dillon,  History 
of  Indiana  (Indianapolis,  1859),  pp.  391,  392. 


14  HISTORY  OF  TAXATION  IN  ILLINOIS  [14 

to  organize  them  as  a  part  of  the  Northwest  Territory  met 
with  poor  success.  They  were,  therefore,  of  necessity  left 
to  shift  for  themselves  until  the  element  composed  of  set- 
tlers from  the  United  States  became  strong  enough  in  the 
neighborhood  to  organize  a  government  without  regard 
to  the  desires  and  wishes  of  the  French  settlers.  The 
French  always  had  an  overwhelming  majority  against 
them.  At  first,  they  were  pitted  against  the  whole  north- 
west, then  against  the  great  Territory  of  Indiana,  and  by 
the  time  the  Territory  of  Illinois  was  formed,  they  made 
up  a  relatively  small  element  in  the  population  of  even 
that  district.^®  As  a  matter  of  course,  the  various  terri- 
tories, as  formed,  perpetuated  the  laws  and  institutions 
familiar  to  them  and  the  whole  body  of  the  law  of  this  sec- 
tion of  the  United  States  presents  a  homogeniety  which 
would  be  truly  remarkable  were  it  not  for  the  explanation 
that  it  swept  on  in  this  fashion  from  the  east. 

Technically  the  Illinois  settlements  passed  out  of  the 
hands  of  the  State  of  Virginia  in  1784.^^  But  the  control 
of  the  Northwest  Territory  was  not  made  effective  before 
1790.  In  that  year,  Governor  St.  Clair  first  visited  the 
section,  organized  it  into  the  County  of  St.  Clair,  and  at- 
tempted to  establish  a  civil  government.^®  The  changes 
which  he  attempted  to  institute  were  not  popular,  how- 
ever, and  very  little  was  accomplished.  In  June,  1793,  a 
correspondent  of  the  Governor  wrote:  "There  has  not 
been  a  review  these  eighteen  months  past,  so  that  it  would 
appear  that  we  have  no  organized  government  whatever."^® 


^'In  1790  there  were  but  131  American  settlers  in  the  Illinois  country. 
During  the  following  decade,  however,  this  figure  increased  to  1500,  suf- 
ficient to  outnumber  the  French  element,  which  at  this  time  was  about  a 
thousand  strong.  After  this  the  immigrants  increased  rapidly  in  number 
and  the  French  were  soon  almost  completely  submerged.  Alvord, 
Origins,  pp.  11,  14,  15. 

^Ull.  Hist.  Coll..  II.  cxix. 

"Boyd,  op.  cit.,  p.  635. 

^'The  Life  and  Public  Services  of  Arthur  St.  Clair,  with  his  Corre- 
spondence and  other  Papers.  Edited  by  W.  H.  Smith  (Cincinnati,  1882), 
II,  p.  317. 


15]  ORIGINS  OF  THE  GENERAL  PROPERTY  TAX  15 

The  first  legislation  of  the  Northwest  Territory  which 
concerned  itself  with  matters  of  taxation  was  passed  in 
1792.  It  dealt  with  the  problems  of  raising  a  revenue  for 
the  local  governments,  the  counties;  legislation  providing 
for  a  territorial  tax  was  not  passed  until  somewhat  later. 
This  law  was  entitled  an  act  "directing  the  manner  in 
which  money  shall  be  raised  and  levied,  to  defray  the 
charges  which  may  arise  within  the  several  counties  in  the 
territory"  and  it  prescribed  a  rudimentary  form  of  the 
general  property  tax  as  the  means  for  raising  the  revenue 
required.^^  It  provided  that  the  county  court  of  quarter 
sessions  in  each  county  should,  annually,  make  up  an  esti- 
mate of  its  expenses  for  the  coming  year  and  send  it  to  the 
governor  and  judges  of  the  territory.  After  considering 
the  estimate  and  determining  what  items  should  stand, 
they  were  to  certify  the  resulting  amounts  back  to  the 
courts  for  levy  and  collection.  This  was  to  be  accom- 
plished in  the  following  manner.  Every  county  was  to  be 
divided  into  small  districts  for  which  commissioners  were 
to  be  appointed  by  the  court.^^  These  commissioners, 
meeting  together,  were  to  decide  the  exact  proportion  of 
the  total  sum  needed  which  should  be  raised  in  their 
respective  districts.  The  apportionment  was  to  be  made 
on  the  basis  of  the  population  and  the  wealth  of  the  various 
districts,  which  were  assumed  to  be  the  best  evidences  of  the 
ability  of  the  different  communities  to  bear  the  burden  of 
supporting  the  government.  The  commissioners  were  spe- 
cifically empowered  to  take  a  list  of  all  the  male  inhab- 
itants over  eighteen  years  of  age,  "stocks  of  cattle,  yearly 
value  of  improved  lands,  and  every  other  species  of  prop- 
erty which  ought  to  affect    the    apportionment."^^     The 

20August  I,  1792.     Territorial  Lazus,  ch.  26. 

2iFor  each  district  having  less  than  60  inhabitants,  there  was  to  be  one 
commissioner ;  districts  having  more  than  60  and  less  than  100  inhabitants 
were  to  have  two  commissioners ;  and  those  having  over  100  inhabitants 
were  to  have  three  commissioners. 

--In  1792  there  was  also  passed  a  law  requiring  merchants,  traders 
and  tavern  keepers  to  pay  a  small  license  fee.  T.  L.,  ch.  24.  Later 
laws  imposed  license  fees  on  billiard  tables  and  ferries.    Jones  and  John- 


16  HISTORY  OF  TAXATION  IN  ILLINOIS  [16 

work  of  dividing  the  sum  to  be  raised  within  a  particular 
district  among  its  residents  was  to  be  done  by  a  board  of 
assessors,  consisting  of  three  men  in  each  district  who  were 
also  appointed  officers.  They  were  to  rate  the  individuals 
"in  just  proportion  to  their  wealth  in  the  county  and 
their  ability  to  pay  either  in  money  or  in  specific  articles, 
agreeable  to  the  order  of  assessment."  In  case  of  dissatis- 
faction with  the  assessment,  any  individual  might  appeal 
to  the  courts.  The  assessment  lists,  when  completed,  were 
to  be  returned  to  the  county  courts  who  were  to  deliver 
them  for  collection  to  the  sheriff,  the  constable,  or  to  some 
special  collector  appointed  by  the  court.  The  collection  of 
the  taxes  was  to  be  enforced  by  the  sale  of  the  property 
assessed  or  by  the  imprisonment  of  the  owners. 

Although  it  is  not  definitely  known  whether  any  taxes 
were  collected  in  the  Illinois  settlements  under  this  law, 
and  although  it  is  even  probable  that  none  were  collected 
there,  it  is  worthy  of  note  that  the  first  tax  law  which 
applied  even  theoretically  to  this  section  provided  a  form 
of  the  general  property  tax. 

In  1795  the  law  of  1792  was  replaced  by  one  taken 
from  the  statutes  of  Pennsylvania.^^  The  property  subject 
to  assessment  remained  practically  the  same  as  under  the 
old  law  but  the  idea  of  income  as  the  measure  of  tax  lia- 
bility was  made  slightly  more  prominent  than  formerly. 
Taxes  were  to  be  apportioned  among  the  property  owners 
according  to  the  "yearly  value  or  profit"  of  their  holdings.^* 
All  unimproved  and  unsettled  lands  were  exempted  from 
taxation.  The  methods  of  administration  Avere  changed 
quite  radically.  Thus  estimates  of  the  annual  expenses, 
instead  of  being  made  up  by  the  county  court  directly  and 
being  approved  by  the  territorial  legislature,  were  to  be 
prepared  by  a  county  board  composed  partly  of  elective 

son,  Laws  of  Indiana  Territory,  ch.  79,  pp.  475-77,  ch.  49,  pp.  347-66.  The 
license  on  traders  applied  at  first  only  to  those  who  dealt  in  liquors  or 
goods  not  produced  in  the  United  States.  Later  it  was  made  to  apply 
only  to  those  selling  goods  not  produced  in  the  territory. 

"7.  L..  ch.  53. 

"This  seems  to  be  a  variety  of  the  so-called  "produce  tax." 


17]  ORIGINS  OF  THE  GENERAL  PROPERTY  TAX  17 

and  partly  of  appointive  officers.^*  The  board  was,  first, 
to  audit  the  county  accounts,  allow  all  just  claims,  and 
determine  the  sum  to  be  raised.  Then,  taking  the  lists  of 
property,  which  were  to  be  furnished  it  by  the  township 
constables,  it  was  to  apportion  the  sum  to  be  raised  amonj; 
the  property  owners.  The  constables'  lists  were  to  give 
under  the  name  of  every  free  person  a  description  of  his 
servants,  live  stock,  lands  and  tenements;  they  were  to 
show  how  much  of  the  land  was  settled  upon  and  culti- 
vated ;  they  were  to  give  an  enumeration  of  all  water-mills, 
boats  of  the  "burthen  of  twenty  barrels  and  upward  and 
every  ferry  and  other  species  of  property  providing  a  yearly 
income."  The  limit  on  the  tax  rate  for  the  county  levies 
was  placed  at  seventy-five  cents  per  two  hundred  dollars 
valuation.  A  small  head  tax  was  provided  for  single  men 
over  twenty-one  years  of  age,  whose  taxable  property 
did  not  exceed  one  hundred  dollars,  the  maximum  for  this 
tax  being  placed  at  one  dollar.^®  The  taxes  were  to  be 
collected  by  appointed  officials,  as  had  been  the  case  in 
the  old  law;  but  the  commissioners  were  to  make  the 
appointments  instead  of  the  court,  as  the  old  law  had  pro- 
vided. Appeal  might  be  made  to  the  commissioners  in  case 
of  dissatisfaction  with  the  assessments. 

In  1798  the  governor  and  judges  copied  a  law  from  the 
code  of  Kentucky  which  made  a  distinct  change  of  policy 
in  taxation.2^  This  law  added  to  the  list  of  property  sub- 
ject to  taxation  unimproved  and  wild  lands  which  until 
this  time  had  not  been  taxed.^®  Thus  a  departure  was  made 
at  this  point  from  the  general  idea  which  had  underlain  leg- 
islation until  this  time,  namely,  that  the  annual  income  was 

25The  county  court  of  quarter  sessions  was  to  appoint  three  commis- 
sioners for  each  county  and  each  town  was  to  elect  one  assessor;  these 
officers  made  up  the  board. 

-'The  legislature  at  this  time  also  passed  a  law  permitting  the  over- 
seers of  the  poor  to  levy  a  rate  for  the  purpose  of  providing  for  the  indi- 
gent poor.  In  laying  their  rate  they  were  to  have  "due  regard*'  for  the 
county  assessment     T.  L.,  ch.  54. 

--'St.  Clair  Papers,  II,  438. 

287.  L.,  ch.  82. 


18  HISTORY  OF  TAXATION  IN  ILLINOIS  [18 

a  proper  test  of  ability  to  pay  taxes.  These  unimproved  and 
wild  lands  were  to  be  divided  into  three  classes  according  to 
quality.  The  rates  were  to  be  thirty  cents  per  one  hundred 
acres  on  *land  of  the  first  grade ;  twenty  cents  on  lands  of 
the  second  grade ;  and  ten  cents  on  third  grade  land.  The 
methods  of  assessment  and  collection  were  not  changed. 
This  act  refers  specifically  in  one  clause  to  the  Illinois 
counties  of  Knox,  St.  Clair,  and  Randolph  so  that  it  is 
certain  that  the  legislature  intended  that  law  should  be 
enforced  in  the  Illinois  country.^® 

Prior  to  this  time  (1799)  the  legislation  had  dealt  with 
taxes  which  were  to  be  levied  only  for  local  purposes  and 
no  provision  had  been  made  for  a  territorial  revenue.^** 
But  now  the  legislature  evolved  a  scheme  of  taxation  which 
provided  for  both  local  and  territorial  expenses  and  which 
was  destined  to  be  of  permanent  significance,  for  it  re- 
mained in  force  practically  unchanged  in  its  essential 
features  for  twenty-five  years  and  through  three  changes 
in  the  form  of  government.  This  legislation,  which  was 
passed  by  the  First  General  Assembly  of  the  Northwest 
Territory  in  1799,  dedicated  to  the  territorial  government, 
to  be  used  for  general  territorial  expenses,  all  taxes  received 
from  the  levy  made  upon  lands,  and  to  the  local  govern- 
ments all  other  taxable  property  to  be  used  as  the  basis 
for  the  country  levies.^^  The  most  interesting  point  in 
this  law  is  its  utilization  of  a  method  of  segregating  the 
sources  of  the  taxes.  But  the  segregation  was  of  a  different 
type  than  that  urged  by  present-day  reformers,  the  land 
being  taxed  by  the  central  authority  and  the  personalty  by 
the  local,  instead  of  vice  versa. 

There  were  no  elected  assessors  under  this  law,  the 
administration  being  placed  wholly  in  the  hands  of  com- 

^^Jbid.,  p.  2o8.  Knox  County,  although  in  fact  an  Indiana  County,  in- 
cluded at  this  time  a  large  part  of  what  is  now  southeastern  Illinois. 

8°This  ignores  the  slight  income  which  may  have  accrued  from  licenses. 
In  1795  Governor  St.  Clair  writes  that  he  knows  of  no  territorial  fund 
for  the  payment  of  territorial  expenses,  such  as  postage,  for  example. 
5"/.  Clair  Papers,  II,  349. 

*^T.  L.,  chaps.  90,  III. 


19]  ORIGINS  OF  THE  GENERAL  PROPERTY  TAX  19 

missioners  appointed  by  the  court  of  quarter  sessions.  In- 
stead of  the  property  being  listed  by  a  constable,  the  new 
plan  provided  that  the  property  owners  should,  of  their 
own  accord,  deliver  to  the  commissioners  the  lists  of  their 
taxable  property. 

Land,  the  basis  for  the  state  tax,  was  to  be  classified, 
as  in  the  act  of  the  previous  year,  into  three  grades  accord- 
ing to  the  quality.  Lands  in  the  first  grade  were  to  be  taxed 
eighty -five  cents  per  one  hundred  acres;  second  rate  lands, 
sixty  cents;  and  third  rate,  twenty -five  cents.  It  should 
be  noted,  however,  that  these  rates  are  not  comparable 
with  the  rates  of  1798  for  now  not  only  were  unimproved 
lands  to  be  classified,  as  had  been  the  case  in  the  act  of 
1798,  but  the  cultivated  also.  This  explains  the  increase 
in  the  rates  over  the  former  scale.^^ 

The  property  made  taxable  for  county  purposes  was 
as  follows:  all  houses  in  towns;  "mansion-houses"  in  the 
country  worth  more  than  two  hundred  dollars;  out-lots; 
water-  and  wind-mills;  ferries;  horses,  mules,  and  asses, 
over  three  years  old;  neat  cattle;  and  bond  servants  over 
twenty-one  years  old.  Able-bodied  single  men  whose  prop- 
erty did  not  amount  to  more  than  two  hundred  dollars 
were  subject  to  a  small  head  tax.  The  rates  varied  on  the 
property  enumerated  above.  There  was  to  be  charged  "on 
every  horse,  mare,  mule  or  ass,.... a  sum  not  exceeding 
fifty  cents;  on  all  neat  cattle,  twelve  and  one-half  cents 
each ;  on  every  stud  horse,  not  exceeding  the  rate  for  which 

he  stands  at  the  season ;  every  bond  servant ,  a  sum 

not  exceeding  one  dollar ;  and  every  able-bodied  single  man 
of  twenty-one  years  and  upwards,  who  shall  not  have  tax- 
able property  to  the  extent  of  two  hundred  dollars,  a  sum 
not  exceeding  two  dollars  nor  less  than  fifty  cents."  The 
other  property  was  to  be  valued  by  appraisers  appointed 
by  the  county  court.  The  rate  of  taxation  on  such  property 
was  not  to  exceed  fifty  cents  on  every  one  hundred  dollars 
of  appraised  valuation.  The  power  to  estimate  the  revenue 
needed  and  to  levy  the  proper  rate  was  given  to  the  county 
courts. 

^^Lands  in  Illinois  were  not  to  be  rated  higher  than  second  class. 


20  HISTORY  OF  TAXATION  IN  ILLINOIS  [20 

The  Territory  of  IrKMarm,  1800-1809. 

The  following  year  (1800)  the  Territory  of  Indiana 
was  set  off  from  the  Northwest  Territory,  Illinois  now 
being  included  in  Indiana.  The  tax  laws  of  the  Northwest 
Territory  were  carried  over  by  the  new  government  with 
relatively  slight  modifications.^^  The  division  of  the  prop- 
erty between  the  territorial  and  county  governments  for 
taxation  purposes  remained  unchanged,  the  revenue  from 
the  land  taxes  going  to  the  territorial  government  and  that 
from  other  taxes  to  the  local  governments.^^  Before  1809 
however,  when  Illinois  became  a  separate  territory,  a  num- 
ber of  changes  had  been  made  in  the  methods  of  assessment 
and  collection  and  in  the  rates  of  taxation  which  are  worthy 
of  note. 

The  manner  of  securing  the  lists  of  property  subject 
to  taxation  for  county  purposes  was  several  times  revised. 
One  of  the  first  acts  of  the  new  government  was  to  change 
the  old  law  of  the  Northwest  Territory  which  directed  that 
these  lists  be  turned  over  to  the  commissioners  by  the  own- 
ers of  taxable  property  of  their  own  accord;  constables 
were  reintroduced  by  a  law  passed  in  1801,  as  the  means 
for  securing  the  lists.^'  In  1803  the  sheriffs  were  directed 
to  receive  the  lists,  going  to  each  township  for  that  purpose 
on  a  previously  advertised  date  and  administering  an  oath 
to  each  person  as  to  the  correctness  of  the  statement  sub- 
mitted.^*^ In  1806  it  was  further  required  that  the  sheriff 
should  apply  personally  to  every  individual  subject  to  tax- 
ation for  a  list  of  his  taxable  property  instead  of  merely 
advertising  his  presence  in  the  township  for  the  purpose  of 
receiving  the  lists.^^ 

^^O.  W.  Howe,  "The  Laws  and  Courts  of  the  Northwest  and  Indiana 
Territories."  Indiana  Historical  Society  Publications  (Indianapolis,  1895), 
n,  14,  15- 

**The  case  of  the  special  land  tax  for  county  buildings  should  be  noted 
here  as  a  possible  exception  to  this  statement.    Cf.  infra,  p.  22. 

^^Laws  of  the  Territory  of  Indiana,  Governor  and  Judges,  i  Sess., 
p.  63,  Nov.  5,  1 801. 

"L.  T.  Ind.,  Gov.  and  Judges,  4  Sess.,  p.  63.    Nov.  5,  1803. 

'^Laws  of  Indiana,  i  Terr.  Ass.,  2  Sess.,  p.  17.    Nov.  24,  1806. 


21]  ORIGINS  OF  THE  GENERAL  PROPERTY  TAX  21 

A  penalty  for  false  estimate  or  failure  to  return  the 
lists  was  now  imposed  (1803)  ;  this  was  to  be  a  fine  of 
fifteen  dollars  and  a  triple  tax.^*  The  lists  were  to  be  de- 
livered by  the  sheriff  to  the  court  of  common  pleas;  this 
court  was  to  estimate  the  expenses  and  levy  the  taxes. 

It  will  be  remembered  that  in  the  former  law  some  of 
the  property  returned  on  the  lists  was  subject  to  specific 
rates.  Some  of  these  rates  were  changed  during  this  period. 
Thus  in  1803  the  maximum  rate  per  head  on  neat  cattle 
was  made  ten  cents  in  place  of  twelve  and  one-half  cents.^® 
In  1808  this  particular  tax  was  repealed.^*^  The  property 
qualification  for  the  tax  on  single  men  in  1803  was  made 
four  hundred  dollars  instead  of  two  hundred  dollars,  and 
the  maximum  rate  two  dollars  and  fifty  cents  in  place  of  two 
dollars*^ ;  in  1806  the  property  qualification  was  reduced  to 
two  hundred  dollars  and  the  maximum  rate  to  one  dollar,*^ 
and  in  1808  the  tax  was  entirely  abandoned.^^  By  a  law 
passed  in  1803,  two  free-holders  in  each  township,  ap- 
pointed by  the  county  court  were  to  appraise  such  property 
as  lots,  houses,  wind-mills,  etc.,  and  the  maximum  rate 
on  this  class  of  property  was  reduced  from  fifty  to  thirty 
cents  for  each  one  hundred  dollars  of  valuation.^*  The  age 
at  which  slaves  and  bond  servants  were  subject  to  taxation 
was  changed  to  the  period  between  sixteen  and  forty  years ; 
formerly  all  over  twenty-one  years  of  age  were  taxable. 

A  very  important  law  from  the  administrative  point 
of  view  was  the  one  passed  in  1805,  prescribing  the  manner 
in  which  the  territorial  tax  should  be  levied.*^  It  provided 
a  method  quite  dififerent  from  that  outlined  in  the  law  of 
1799  and  took  a  long  step  toward  modern  practice  in  a 
number  of  particulars.     Under  this  new  plan,  the  land 

38L.  T.  Ind.,  Gov.  and  Judges,  4  Sess.,  p.  63,  Nov.  5,  1803. 

^nhid.,  p.  68. 

*oL.  Ind.,  2  Terr.  Ass.,  2  Sess.,  p.  31,  Oct.  26,  1808. 

«L.  T.  Ind.,  Gov.  and  Judges,  4  Sess.,  p.  63,  Nov.  5,  1803. 

*^L.  Ind.,  I  Terr.  Ass.,  2  Sess.,  p.  ii^  Nov.  24,  1806. 

*3L.  Ind.,  2  Terr.  Ass.,  2  Sess.,  p.  31,  Oct  26,  1808. 

**L.  T.  Ind.,  Gov.  and  Judges,  4  Sess.,  p.  63,  Nov.  5,  1803. 

*5L.  Ind.,  I  Terr.  Leg.,  i  Sess.,  p.  30  et  seq.,  Aug.  26,  1805. 


22  HISTORY  OF  TAXATION  IN  ILLINOIS  [22 

was  not  to  be  grouped  into  a  small  number  of  classes 
according  to  quality,  as  had  been  the  case  under  the  old 
system,  but  was  to  be  assessed  according  to  its  exact  value. 
There  was  to  be  a  regular  annual  assessment  made  by  a 
county  assessor  appointed  by  the  court  of  common  pleas. 
Each  land  holder  was  to  deliver  to  the  assessor,  under 
penalty,  a  list  of  the  lands  owned  by  him.  The  assessor 
was  also  to  be  furnished,  by  the  territorial  government, 
with  lists  of  lands  in  each  county,  made  up  from  records 
of  the  United  States  land  offices.  Using  these  lists  as  a 
basis,  the  assessor  was  to  determine  the  value  of  the  land 
per  one  hundred  acres,  "according  to  the  quality  of  the  soil 
and  the  relative  situation",  ignoring  improvements.  The 
rate  of  taxation  was  to  be  fixed  by  the  auditor  who  was 
directed  to  strike  a  "rate  sufficient  to  produce  the  sum 
required"  for  territorial  expenses.  The  sheriffs  of  the 
various  counties  were  made  the  collectors  of  the  tax.  Two 
years  later,  in  1807,  the  assessment  of  land  was  made  quad- 
rennial instead  of  annual.^^  In  the  years  when  no  general 
assessment  was  to  be  made,  the  territorial  auditor  was  to 
add  to  the  county  lists  those  lands  which  had  been  pur- 
chased from  the  United  States  during  the  previous  year, 
valuing  such  purchases  at  two  dollars  per  acre.  At  the 
same  time  the  power  to  strike  the  tax  rate  was  taken  from 
the  auditor,  the  rate  being  now  fixed  by  law"  at  twenty 
cents  on  every  one  hundred  dollars  valuation. 

An  additional  use  for  the  territorial  tax  machinery 
was  authorized  in  1808  when  the  legislature  made  provision 
for  a  special  land  tax  to  be  levied  exactly  as  the  territorial 
land  tax  was  levied,  for  the  purpose  of  providing  funds 
for  erecting  county  buildings.^ ^  The  maximum  rate  which 
might  be  levied  for  this  purpose  was  ten  cents  on  the  one 
hundred  dollars  valuation. 

Efforts  to  administer  the  territorial  land  tax  in  the 
Illinois  counties  met  with  rebuffs  at  the  very  outset. 
Probably  the  first  territorial  tax  levied  in  the  Territory  of 

**Jones  and  Johnson,  op.  cil.,  ch.  79,  pp.  475-477- 
"L.  Ind.,  2  Terr.  Ass.,  2  Sess.,  p.  31,  Oct.  26,  1808. 


23]  ORIGINS  OF  THE  GENERAL  PROPERTY  TAX  23 

Indiana  was  in  1805  when  the  law  was  passed  placing  a 
tax  on  land  according  to  its  value,  for  the  purpose  of  pro- 
viding for  the  expenses  of  the  territorial  government.     In 

1806  it  appears  that  no  tax  was  collected  in  the  Illinois 
counties  of  St.  Clair  and  Randolph;  this  failure  was  due 
to  the  fact  that  the  courts  of  common  pleas  of  these  counties 
had  failed  to  appoint  the  assessors  and  collectors.^ ^     In 

1807  the  assessor  in  St.  Clair  County  refused  outright  to 
make  the  proper  assessment  for  territorial  taxes;  in  the 
same  year  the  assessor  in  Knox  County  had,  for  some 
reason,  failed  to  do  so,  and  an  attempt  to  assess  the  tax 
in  Randolph  County  was  accompanied  by  various  irregu- 
larities.^^ Again,  the  next  year,  1808,  trouble  was  caused 
in  two  of  the  counties  by  the  failure  of  the  assessors  to 
make  out  and  return  the  assessment  lists.^*^  The  case  of 
Randolph  County  in  1807  is  the  first  certain  evidence  of 
a  tax  actually  being  levied  and  collected  in  Illinois. 

Summary. 
By  1809  the  legislation  of  Indiana  Territory  had 
reached  a  stage  of  development  in  regard  to  assessment 
methods  which  was  not  attained  by  the  State  of  Illinois 
until  thirty  years  later.  For,  when  Illinois  separated  from 
Indiana,  there  was  a  retrogression  in  this  particular  and 
the  scheme  of  classifying  land  into  rough  groups  which 
was  again  adopted,  persisted  in  the  state  legislation  until 
1839.  By  1809,  however,  a  system  approximating  the  general 
property  tax  was  in  force  in  the  Illinois  country  and  was 
the  chief  source  from  which  both  central  and  local  govern- 
ments derived  their  revenues.  Since  the  expenses  of  the 
government  were  very  slight  during  these  years,  and  since 
there  were  other  sources  of  revenue  such  as  fees  and 
licenses,  the  taxes  levied  were  undoubtedly  insignificant. 
The  system,  too,  was  crude  and  rudimentary  in  character. 

*^L.  Ind.,  I  Terr.  Leg.,  2  Sess.,  p.  3. 

*9Jones  and  Johnson,  op.  cit.,  ch.  75,  pp.  465-468.  The  irregular  col- 
lection of  taxes  was  legalized  by  this  act  but  the  sales  of  lands  for  taxes 
were  nullified. 

60L.  Ind.,  2  Terr.  Leg.,  2  Sess.,  p.  39,  Oct.  26,  1808. 


24  HISTORY  OF  TAXATION  IN  ILLINOIS  [24 

Very  large  exemptions  were  made  and  the  idea  of  the 
income  from  the  property  taxed  rather  than  its  capital 
value  was  often  emphasized.  From  these  same  territorial 
beginnings,  it  would  have  been  possible  to  develop 
quite  naturally  a  property  tax  somewhat  similar  to  the 
English  local  rates,  where  the  income  from  the  property 
is  the  test  of  its  value  and  the  basis  for  the  apportionment. 
But  the  principles  established  by  this  territorial  legisla- 
tion were  adopted  and  so  extended  by  the  government  of 
the  new  Territory  of  Illinois,  as  to  result  in  the  particular 
form  of  the  general  property  tax  now  found  in  the  state. 

The  influence  of  the  French  settlements  upon  the 
system  of  taxation  adopted  was  insignificant.  They 
neither  developed  a  system  of  their  own  during  the  years 
of  their  isolation  before  they  became  subject  to  the  control 
of  the  Northwest  Territory,  nor  did  they  take  an  active 
part  in  the  formation  of  the  system  which  is  found  in 
existence  in  1809.  Doubtless  they  could  not  have  made 
their  efforts  effective,  had  they  tried,  outnumbered  as  they 
were  in  the  political  division  in  which  they  were  situated. 

A  form  of  the  general  property  tax,  then,  was  the 
system  adopted  by  the  Northwest  Territory  when  the  inter- 
ests of  the  far  western  settlements  were  too  slight  to  be  of 
consequence  and  when  the  actual  application  to  them  was 
not  seriously  attempted.  This  system  was  continued  by 
the  Territory  of  Indiana,  whose  attempts  to  administer 
it  in  Illinois  met  with  difficulties  and,  in  certain  instances, 
with  the  positive  refusal  of  the  county  authorities  in  the 
Illinois  region  to  cooperate.  It  was  adopted  by  the  terri- 
torial government  of  Illinois  because  the  American  ele- 
ment in  the  population  had,  by  this  time,  become  strong 
enough  to  disregard  the  early  French  settlers  in  the  Illi- 
nois country. 


B.     THE  FORMATIVE  PERIOD,  1809-1838 

CHAPTER  II. 

Economic  Characteristics  and  the  Financial  Problem. 

It  is  important  in  taking  up  the  study  of  the  general 
property  tax  in  Illinois  during  the  early  period  of  its  his- 
tory, 1809-1838,  to  inquire  about  the  demands  made  upon 
the  government  at  this  time  and  about  the  possibilities  of 
the  system  of  taxation  in  force  as  a  source  of  revenue  to 
meet  these  demands.  From  one  point  of  view,  at  this  early 
stage,  the  two  things  were  really  one;  for,  as  will  appear, 
the  demands  made  upon  the  government  at  this  time  were 
limited  almost  entirely  by  the  possibility  of  obtaining  rev- 
enue to  meet  them — that  is,  the  fiscal  problem  was,  pri- 
marily, what  could  be  afforded  rather  than  what  should 
be  done. 

The  years  under  discussion  make  up  the  period  of  the 
state's  childhood.  Even  in  1840  Illinois  was  still  a  fron- 
tier community,  containing  only  five  hundred  thousand 
inhabitants.  During  these  years  everything  which  must 
be  done  to  make  a  wilderness  a  place  of  habitation  for  man 
remained  yet  to  be  done  for  Illinois.  There  were  no  public 
buildings  and  few  school  houses ;  the  state  owned  no  public 
works;  there  were  few  roads  or  other  artificial  means  of 
communication;  courts  had  to  be  established  and  jails 
erected.  In  short,  Illinois  was  without  a  "capital  ac- 
count''; it  had  no  "plant".  The  state  lived,  so  to  speak, 
in  an  unfurnished  house.  It  was  necessary  not  only  to 
pay  running  expenses  but  to  buy  .the  furniture.  In  addi- 
tion various  unusual  calls  were  made  upon  the  young  gov- 
ernment. For  example,  the  dearth  of  a  circulating  med- 
ium very  early  served  as  the  basis  for  an  appeal  to  the 
government  to  loan  its  credit  as  security  for  the  issue  of 
bank  notes.  Thus  the  financial  difficulty  was  not  only  that 
of  operating  a  government  but  also  of  providing  the 
machinery  and  plant  with  which  to  work. 

25 


26  HISTORY  OF  TAXATION  IN  ILLINOIS  [26 

The  Sphere  of  State  Activity. 

On  the  other  hand  the  problem  of  deciding  upon  the 
sphere  of  the  activity  of  the  government  was  somewhat 
simplified  by  the  delegation  to  private  companies  and  to 
individuals  of  many  of  the  functions  which  are  usually 
considered  governmental.  Thus,  many  of  the  early  turn- 
pikes were  built  as  private  enterprises,  the  promoters 
seeking  through  tolls  to  obtain  their  return  from  those 
using  the  roads.^  Bridges  were  often  constructed  on  the 
same  plan.^  Ferries  were  operated  by  individuals 
under  legislative  acts  which  usually  sought  to  make  the 
enterprises  attractive  by  granting  monopolies  for  a  given 
distance  up  and  down  the  streams.  Schools  were  almost 
entirely  maintained  through  private  initiative  during  this 
period.  The  dependent  poor,  instead  of  being  cared  for  in 
•county  institutions,  were  usually  farmed  out  to  persons 
who  could  use  their  labor.  The  penitentiary  even  was, 
for  a  time,  turned  over  to  private  individuals  for  manage- 
ment in  order  to  save  money.^  Among  the  many  devices 
resorted  to  for  lessening  demands  which  would  normally 
be  met  by  taxation  was  the  lottery.  A  number  of  such 
schemes  were  projected  to  meet  the  expenses  of  some  of 
the  internal  improvement  projects.*  There  was  a  custom 
of  locating  the  county  seat  at  that  town  within  a  county 
which  would  offer  the  largest  donation  of  land  or  of  money 
to  be  used  toward  the  expenses  of  erecting  county  build- 
ings."  The  location  of  the  state  capital  itself  was  deter- 
mined primarily  on  this  principle."     Part  of  the  plot  of 

^The  governmental  activity  in  these  cases  usually  extended  far 
enough  to  fix  the  maximum  rates  of  toll  which  might  be  charged. 

^Sometimes  individuals  would  advance  the  money  for  a  bridge  with 
the  understanding  that  the  county  would  reimburse  them  after  a  speci- 
fied time. 

^Auditors  Report,  1839,  p.  12. 

*Laws  1819,  pp.  257,  310;  L.  1838-9,  p.  56. 

'Any  number  of  examples  of  this  practice  might  be  given.  Some 
sixty-seven  cases  of  this  sort  were  noted  during  these  years.  The  acts 
usually  prescribed  a  minimum  grant  of  twenty  acres. 

"The  town  of  Springfield  was  chosen  as  the  capital  because  of 
the  donations  pledged  to  the  state  treasury.    The  act  passed  February  25, 


27]  ECONOMIC   CHARACTERISTICS  27 

land  on  which  the  first  state  prison  was  built  was  sold 
to  raise  money  to  build  the  walls  and  workshops.  By 
such  methods  the  government  was  able  to  some  extent  to 
share  in  the  increment  of  value  which  accrued  to  the  land 
at  the  place  where  public  buildings  were  erected  and 
public  business  transacted.  The  utilization  of  the  fee 
system  for  compensating  many  of  the  public  officials  made 
possible  a  smaller  tax  levy  than  would  otherwise  have  been 
necessary.  When  salaries  were  paid,  they  were  extremely 
small.^ 

Taxable  Capacity  of  the  People. 

To  a  certain  extent  it  is  true  that,  as  the  demand  for 
the  increase  of  governmental  functions  grew,  the  means  for 
meeting  this  demand  also  increased.  In  1810,  when  the 
territory  of  Illinois  had  a  population  of  only  twelve  thous- 
and people,  not  so  many  school-houses,  courts  and  roads 
were  needed  as  thirty  years  later  when  the  population  was 
nearly  half  a  million.  The  increase  in  population  was  in- 
deed remarkable  in  itself,  and  it  may  be  thought  that  it 
should  have  served  as  an  entirely  adequate  basis  for  in- 
creased taxation.  During  the  first  decade,  from  1810  to 
1820,  the  population  quadrupled;  during  each  of  the  two 
following  decades  it  trebled.^  But  it  must  be  remembered, 
that  it  was  entirely  rural  even  at  the  end  of  the  period  un- 
der discussion.^  The  settlers  were  largely  land-hungry  im- 
migrants who  had  pushed  west  because  of  economic  press- 

1837,  locating  the  seat  of  the  government,  fixed  the  amount  of  the  mini- 
mum donation  at  fifty  thousand  dollars  and  two  acres  of  land.  L.  1836-7, 
p.  321.  In  Vandalia,  the  former  capital,  public  buildings  were  erected 
mainly  from  the  proceeds  from  the  sale  of  four  sections  of  land  which 
had  been  given  to  the  "state  by  .'the  federal  government  for  that 
purpose,  although  some  donations  were  received  from  citizens.  John 
Moses,  Illinois,  Historical  and  Statistical  (Chicago,  1895),  I,  327;  J.  N. 
RejTiolds,  My  Own  Times  (Chicago,  1879),  p.  137. 

'L.  1815-16,  pp.  73-76;  L.  1816-17,  pp.  52-54;  L.  1817-18,  pp.  98-100. 

^Twelfth  Census;  Population,  part'i,  p.  xxiii. 

•In  1832,  Chicago  was  an  unincorporated  village  with  about  250 
inhabitants  and  in  1837  had  a  population  of  only  8000.  See  Illinois  in 
1837,  A  Sketch  (Philadelphia,  1837),  p.  119. 


28  HISTORY  OF  TAXATION  IN  ILLINOIS  [28 

ure  behind  them  and  with  the  thought  of  economic  better- 
ment foremost  in  their  minds.  The  little  money  they  had 
was  usually  exchanged  at  once  for  land  which  was  capable 
of  yielding  only  a  small  immediate  return  because  of  the 
difficulty  of  securing  a  market  for  their  products.  In 
1825  the  correspondent  of  Niles  Register  wrote :  "At  pres- 
ent, wheat  is  hardly  worth  twenty-five  cents  per  bushel,  and 
corn  and  oats  will  not  fetch  more  than  eight  or  ten."^^ 
This  was,  in  large  part  due  to  the  lack  of  transportation 
facilities.  As  someone  has  put  it,  the  West,  during  this 
period,  was  "a  good  place  to  make  a  poor  living".  In  1824 
General  Coles  received  a  request  for  information  concern- 
ing the  system  of  poor  relief  in  Illinois."  He  replied  that 
he  was  unable  to  furnish  it,  because  of  "the  fact  that  Illi- 
nois has  no  poor ;  at  least  so  few  that  I  have  not  been  able 
to  learn  anything  about  them."  But  if  there  was  little 
danger  of  starvation,  there  was  also  little  probability  of 
securing  any  fortune  except  the  potential  one  depending 
upon  the  rise  in  land  values.  Because  of  this  absence  of 
immediate  returns  the  actual  taxable  capacity  of  the  people 
was  very  small  indeed.^^ 

To  this  must  be  added  a  pronounced  indisposition  on 
the  part  of  the  people  to  submit  to  taxation.  It  was  a  part 
of  the  spirit  of  the  frontier.  The  settlers  seemed  to  think 
there  was  something  ignoble  about  paying  taxes.  An 
example  of  this  spirit  is  seen  in  the  speedy  repeal  of  two 
laws  passed  at  the  legislative  session  of  1825,  levying  slight 

^f^Niles  Register,  XXIX,  165,  Nov.  12,  1825. 

"///.  Hist.  Call.,  IV,  51. 

^2The  situation  was  very  well  summarized  by  Governor  Edwards  in 
his  inaugural  address  in  1826,  when  he  said : — 

"In  a  new  state,  progressively  settling  as  ours  is;  without  manufac- 
tures; furnishing  but  few  articles  for  exportation;  consuming  a  con- 
siderable proportion  of  those  produced  by  the  labor  of  others;  and 
obliged  to  employ  the  most  of  its  active  capital  in  the  building  of  houses, 
opening  of  farms,  and  other  improvements  which  yield  no  immediate 
profit;  a  scanty  circulation  of  money;  and  consequent  difficulty  of  paying 
high  taxes;  are  results  so  probable  in  themselves,  and  so  fully  verified 
by  our  own  experience  that  they  cannot  be  overlooked.  .  ."  6".  /.,  5  G.  A., 
1  Sess.,  p.  47,  1826. 


29]  ECONOMIC   CHARACTERISTICS  29 

special  taxes  for  schools  and  roads.     Governor  Ford,  in 
commenting  on  this  repeal,  says:-^^ 

"The  very  idea  of  a  tax,  though  to  be  paid  in  labor  as 
before,  was  so  hateful,  that  even  the  poorest  men  preferred 
to  work  five  days  in  the  year  on  the  roads,  (as  under  the 
old  poll  arrangement )  rather  than  to  pay  a  tax  of  twenty- 
five  cents,  or  even  no  tax  at  all."  The  members  of  the 
legislature  well  knew  the  temper  of  the  people  on  this  ques- 
tion and  steadfastly  refused  to  pass  laws  which  involved 
the  levy  of  additional  taxes.  Indeed  they  sometimes  went 
to  great  extremes  to  avoid  levying  taxes,  as  when  they  sold 
school  lands  and  borrowed  the  proceeds  for  the  current 
expenses  of  government. ^^  If  they  had  imposed  taxes  to 
meet  their  legitimate  expenses,  the  lands  could  have  been 
held  for  a  much  more  favorable  market  or  could  have  been 
retained  indefinitely  under  a  lease  system.  As  it  was,  the 
heritage  of  the  state  in  school  land  was  frittered  away,  in 
the  opinion  of  many  contemporaries,  by  the  reluctance  of 
the  legislators  to  risk  their  popularity  with  a  tax  hating 
people,  by  a  proper  levy  of  taxes. 

(The  Agreement  With  the  United  States  Government. 

Illinois  made  an  agreement  with  the  United  States 
government  when  the  state  was  admitted  into  the  Union 
which  had  important  effects  upon  the  taxation  problem  in 
the  following  years.  The  terms  of  the  agreement  were 
briefly  these :  the  federal  government  was  to  give  the  state 
one  section  of  land  in  every  township  for  the  use  of  schools ; 
it  was  also  to  give  all  the  salt  springs  within  the  state 
with  certain  reserves  of  land  about  them;  it  agreed,  fur- 
ther, to  give  five  per  cent  of  the  proceeds  from  the  sale  of 
lands  lying  within  the  state,  two-fifths  of  which  amount 
was  to  be  spent  under  the  direction  of  the  federal  govern- 
ment in  making  roads  leading  to  the  state,  and  the  residue 

i^ThomasFord,  /fwfory  of  Illinois  Jrom  its  CBmmencement  as  a 
State  in  1818  to  1847  (Chicago,  1854),  pp.  58-60;  L.  1824-5,  p.  121;  R.  L. 
1826-7,  p.  364. 

i*Gerhard,  Illinois  As  It  Is  etc.  (Chicago,  1857),  p.  65;  Ford,  op.  cit., 
p.  77  et  seq. 


30  HISTORY  OF  TAXATION  IN  ILLINOIS  [30 

to  be  appropriated  by  the  state  legislature  for  the  encour- 
agement of  learning;  and,  finally,  the  federal  government 
was  to  allow  the  state  one  entire  township  for  the  use  of  a 
"seminary  of  learning".  The  state,  in  its  turn,  agreed  to 
exempt  from  taxation  all  lands  sold  by  the  government  for 
five  years  after  the  date  of  sale  and  to  exempt  all  lands 
granted  by  the  federal  government  as  bounty  lands  for 
military  services  while  they  remained  in  the  hands  of  the 
original  patentees  or  their  heirs,  and  for  three  years  there- 
after.i*^ 

The  state  government  leased  the  saline  springs,  but 
used  the  revenues  to  improve  the  properties  in  order  to 
increase  the  output  of  salt,  not  depending  upon  them  to 
any  great  extent  as  a  financial  resource  for  the  payment  of 
the  expenses  of  the  government. ^^  When,  about  1830,  the 
springs  became  worthless  for  the  production  of  salt,  the 
reserves  surrounding  them,  which  amounted  to  some  forty 
thousand  acres,  were  sold  by  the  state  government  and  the 
resulting  revenue  was  used  in  internal  improvements.^'^ 
According  to  the  bargain  with  the  United  States  govern- 
ment, this  was  the  only  revenue  which  the  state  was  free 
to  appropriate,  the  enabling  act  specifying  that  the  balance 
should  go  to  the  support  of  education  in  one  form  or 
other.  ^^ 

Discontent  with  the  arrangement  became  apparent 
very  early.  In  some  counties  where  a  large  proportion  of 
the  land  was  made  up  of  bounty  lands  which  were  exempt 
from  taxation,  it  was  found  necessary  to  grant  subven- 


i^The  enabling  act.  R.  S.,  1909,  p.  25. 

^•5".  /.,  7  G.  A.,  I  Sess.,  p.  60.  In  1819  an  attempt  was  made  to  borrow 
$25,000,  the  proceeds  from  the  Ohio  Salines  being  offered  as  partial 
security.    ///.  Hist.  Coll.,  IV,  7-8. 

"W.  /.,  8  G.  A.,  I  Sess.,  p.  94- 

i*It  should  be  ^oted,  however,  that  the  money  which  was  paid  into 
the  various  school  funds  by  the  federal  government  was  almost  invariably 
borrowed  by  the  state  and  used  to  pay  current  expenses.  Thus  in  1834, 
December  4,  the  state  owed  these  funds  approximately  $114,000.  5".  /., 
9  G.  A.,  I  Sess.,  p.  II. 


31]  ECONOMIC   CHARACTERISTICS  31 

tions  from  the  state  treasury  to  enable  them  to  meet  their 
local  expenses.^  ^ 

The  provision  which  exempted  newly  sold  lands  for  five 
years  also  worked  hardship  because  Illinois  was  being 
settled  very  rapidly  at  this  time.  A  real  injustice  was 
caused  when  it  was  necessary  to  meet  all  expenses  of  gov- 
ernment in  a  given  year  from  taxes  levied  on  the  land  of 
those  settlers  only  whose  land  had  been  bought  from  the 
government  at  least  five  years  before.  During  this  period 
the  population  of  the  state,  roughly  speaking,  doubled  itself 
every  five  years  so  that  the  land  subject  to  taxation  under 
this  agreement  was  approximately  one-half  of  the  land 
sold  and  normally  subject  to  the  rates.  This  was  the  cause 
of  a  great  deal  of  bitterness  in  some  quarters,  the  older 
settlers  feeling  that  they  were  being  wrongfully  taxed  to 
support  others.  This  feeling  found  expression  in  an  in- 
teresting message  of  Governor  Edwards  to  the  legislature 
in  1830,  in  which  he  recommended  such  drastic  action  as 
the  abrogation  of  the  agreement  made  in  the  enabling  act.^^ 

The  Failure  of  the  First  Banking  Venture. 

The  part  played  by  the  state  in  the  banking  ventures 
of  the  time  is  another  element  which  affected  the  problem 
of  taxation  to  a  considerable  extent.  During  the  years 
just  preceding  1820,  a  great  number  of  banks  had  been  es- 

^^R.  L.  1832-3,  p.  518;  L.  1835-6,  p.  231.  The  amounts  expended  from 
the  state  treasury  to  counties  in  the  military  tract  were  as  follows : — 

Two  years  ending  Nov.  30,  1828  $2938 

Two  years  ending  Dec.      i,  1830  $4875 

Two  years  ending  Dec.     i,  1832  $8950 

Two  years  ending  Dec.     1,  1834  $8950 

Two  years  ending  Nov.  30,  1836  _ $8550 

Dec.  3,  1836-Dec.  I,  1838  .._ $6000 

'*5".  /.,  7  G.  A.,  I  Sess.,  p.  49.  By  a  long  and  subtle  argument  the 
Governor  thought  he  proved  that  the  public  domain  remaining  unsold 
within  the  state  really  belonged  to  the  state,  and  he  suggested  that  there- 
after taxes  be  levied  on  all  lands  as  soon  as  sold,  without  regard  to  any 
claim  to  the  supposed  exemption.  In  1837  a  delegation  was  appointed  by 
the  legislature  to  urge  upon  Congress  "the  propriety  and  expediency"  of 
repealing  the  law  making  these  exemptions.  Joint  Resolution  of  January 
6,  1837.    L.  1836-7,  p.  Z37- 


32  HISTORY  OF  TAXATION  IN  ILLINOIS  [32 

tablished  in  the  new  western  states.  Ford  states  that  Ohio 
and  Indiana  had  incorporated  about  forty  each.^^  There 
were  two  more  in  St.  Louis  and  the  territorial  government 
of  Illinois  had  chartered  two.  These  banks  all  issued 
notes  on  insufficient  security  and  began  to  fail  about  1820, 
Their  notes  had  driven  out  specie,  so  with  the  failure  of 
the  banks,  the  country  was  left  without  money  of  any  sort, 
except  such  as  came  into  the  territory  with  new  immigrants 
and  from  taxes  of  non-residents.  It  was  to  meet  this  need 
that  the  first  state  bank  was  established  in  1821.  Its  only 
asset  was  the  credit  of  the  state,  the  legislature  pledging 
this  as  security  for  interest-bearing  notes,  to  be  redeemed 
within  ten  years. ^^One  hundred  dollars  could  be  borrowed 
by  individuals  upon  personal  security  and  a  larger 
sum  upon  the  security  of  real  estate.  The  officials  of 
the  bank  were  charged  with  having  paid  little  attention 
to  the  security  offered.  That  they  did  not  lack  borrowers 
under  these  conditions  is  shown  by  the  fact  that  nearly 
1300,000  was  loaned  out  "almost  at  once.^^  Many  people 
borrowed  with  no  intention  of  repaying.  The  notes 
never  circulated  at  par,  and  they  fell  steadily  in  value  from 
twenty-five  cents  to  fifty  and  seventy-five  cents  be- 
low par.^*  Auditors'  warrants  payable  in  bank  notes 
depreciated  with  the  fall  in  the  value  of  the  bank  notes, 
so  that  the  government  in  buying  its  supplies  had  to 
pay  much  more  than  the  market  prices  to  allow  for  this 
decline.  Only  about  one-fifth  of  the  |154,878.87  worth  of 
warrants  issued  by  the  auditor  in  1825  and  1826  were  at 
par.  Nearly  one  half  were  at  33  1-3  cents  on  the  dollar 
and  the  balance  ranged  irregularly  between  these  two  ex- 
tremes.2®  In  1826  the  government  recognized  the  depre- 
ciation by  setting  a  discount  rate  for  bank  paper  paid  out 
at  the  state  treasury .^^     Paper  received  at  face  value  for 

2iFord,  op.  cit.,  p.  43. 
22L.  1821,  p.  80;  ///.  Hist.  Coll.,  IV,  7. 
235*.  /.,  9  G.  A.,  I  Sess.,  p.  297 ;  Ford,  op  cit.,  p.  43  et  seq. 
2*5".  /.,  5  G.  A.,  I  Sess.,  pp.  22,  57 ;  Ford,  op.  cit.,  p.  43,  et  seq. 
.  ^<^Aud.  Rep.,  1826,  p.  37. 
2«L.  1826,  p.  90. 


33]  ECONOMIC  CHARACTERISTICS  33 

taxes  was  paid  out  at  as  much  as  fifty  per  cent  discount. 
Those  state  officers  who  received  their  compensation  in  the 
form  of  a  fixed  salary  were  seriously  embarrassed  by  this 
depreciation  and  found  it  necessary  to  appeal  to  the  legis- 
lature for  the  passage  of  special  relief  acts  increasing  their 
salaries  to  make  good  the  losses  caused  by  the  bank 
paper.2''^  But  the  stat«  at  last  extricated  itself  from  this 
embarrassing  situation.  The  value  of  the  bank  notes  after 
a  time  was  gradually  raised  by  the  periodical  destruction 
of  those  received  as  taxes  and  in  payment  of  obligations 
to  the  bank;  and  finally  the  remaining  liability  was  paid 
with  money  obtained  from  a  loan.  One  hundred  thousand 
dollars  was  borrowed  for  the  purpose,  the  famous  "Wig- 
gins Loan."  This  was  the  beginning  of  the  state  debt.^* 
The  currency  situation  had  important  effects  upon  the 
problem  of  the  collection  of  the  revenue  but  here  it  is  in- 
tended merely  to  point  out  its  effect  upon  the  amount  of 
money  which  had  to  be  raised  by  taxation.  The  state's 
connection  with  this  early  banking  scheme  increased  that 
amount  by  approximately  one-fourth.^® 

The  Financial  Problem  in  General. 
But  in  spite  of  all  this,  when  one  examines  the  actual 
amounts  involved  in  the  transactions  in  this  time,  he  is 

-"A  law  passed  in  1823  added  50%  to  salaries.  L.  1823,  p.  131;  L. 
1824-5,  p.  10;  Reynolds,  My  Own  Times,  p.  143;  5".  /.,  5  G.  A.,  i  Sess., 
p.  55- 

28Re)Tiolds,  op  cit.,  p.  144.  The  only  possible  exception  to  the  above 
statement  is,  that  in  1819  a  loan  of  $25,000  was  authorized  and  an  attempt 
was  made  by  Governor  Bond  to  negotiate  it.  No  evidence  was  foimd  in 
the  accounts  of  the  state  treasury  of  this  money  ever  having  been 
received  or  repaid.    L.  1819,  p.  16;  ///.  Hist.  Coll.,  IV,  7, 

2'5".  /.,  5  G.  A.,  I  Sess.,  p.  64.  A  report  made  in  1835  shows  that  the 
state  was  held  responsible  for  almost  three  hundred  thousand  dollars 
($299,910.88),  minus  whatever  could  be  realized  from  outstanding  assets 
whose  nominal  value  was  at  the  time  of  this  report  $118,523.  S.  J.,  9 
G.  A.,  I  Sess.,  p.  297.  The  responsibility  for  paying  the  one  himdred 
thousand  dollars  loan  was  taken  over  by  one  of  the  later  state  banks  as  a 
way  of  paying  the  state  some  of  the  profits  made  by  the  state  in  a  deal 
in  bank  stocks.  But  this  bank  also  failed  and  the  debt  fell  back  upon  the 
state  once  more.  The  banking  venture  of  1821  increased  the  state  budget 
bv  about  one-fourth. 


34  HISTORY  OF  TAXATION  IN  ILLINOIS  [34 

impressed  by  the  feeling  that  this  was  indeed  the  era  of 
small  things.  The  largest  amount  received  into  the  state 
treasury  in  any  biennium  during  this  period  was  only  $150, 
000;  the  sum  total  of  the  budgets  for  the  whole  period  of 
thirty  years  was  less  than  a  million  dollars.  Even  at  the 
end  of  the  period,  the  state  was  thinly  settled  and  the  de- 
mands for  revenue  for  purposes  which  require  very  large 
sums  to-day  were  then  ridiculously  small.  Scattered 
through  the  state  reports,  one  frequently  finds  amusing 
instances  which  emphasize  this.  In  1833,  for  example, 
the  finance  committee  of  the  House  of  Representatives 
recommended  that  the  annual  salary  of  the  warden  of  the 
penitentiary  be  reduced  from  |600  to  $300,  because,  as 
the  report  reads,  "During  the  last  two  years,  only  four  con- 
victs have  been  confined  in  the  penitentiary;  that  two  of 
these  have  been  pardoned  by  the  Governor;  that  the  time 
of  one  has  expired,  leaving  only  one  at  this  time  in  confine- 
ment."3o 

This  brief  consideration  may  serve  to  point  out  some 
of  the  more  important  factors  which  shaped  the  financial 
problem  of  the  state.  It  appears,  in  regard  to  the  scope 
of  this  problem,  that,  first,  the  state  was  confronted  with 
the  task  of  organizing  itself,  and  of  providing  itself  with 
the  necessary  tools  with  which  to  do  its  work ;  that,  second, 
the  scope  of  the  activity  of  the  state  was  narrower  in  some 
directions,  as,  for  example,  in  the  matter  of  road  building, 
and  broader  in  other  directions,  such  as  banking,  than  is 
the  case  at  present.  In  regard  to  the  ability  of  the  state 
to  solve  its  financial  problem,  the  examination  has  pointed 
out  that  the  taxable  capacity  of  the  people  was  not  great, 
chiefly  because  of  the  poor  immediate  returns  from  their 
Investments  which  consisted  largely  of  land;  that  the 
state  was  handicapped  by  its  agreement  with  the  United 
States  government  with  regard  to  the  exemption  from  tax- 
ation of  certain  lands,  and  that,  finally,  the  state's  unfor- 
tunate experiment  in  banking,  increased  very  appreciably 
the  financial  burden  which  had  to  be  carried  by  the  strug- 
gling young  commonwealth. 
»o//.  /.,  8  G.  A.,  1  Sess.,  p.  138. 


CHAPTER  III. 
Legislation,  1809-1838. 

Although  the  legislation  of  the  Territory  of  Indiana 
was  carried  over  in  its  entirety  by  the  Territory  of  Illinois 
upon  its  formation  in  1809,  it  must  not  be  thought  that  all 
the  revenue  laws  thus  adopted  were  at  once  put  into  opera- 
tion. In  fact,  it  is  very  probable  that  there  were  few  In- 
diana tax  laws  used  in  the  Territory  of  Illinois  without 
specific  reenactment  by  the  Illinois  legislative  authorities. 
As  the  needs  for  revenue  presented  themselves,  the  Illinois 
legislature  passed  laws  to  meet  them,  patterned  very  large- 
ly, it  is  true,  aft«r  the  laws  of  Indiana,  but  after  the  In- 
diana laws  of  a  period  a  little  earlier  than  1809,  when  the 
actual  separation  took  place.  This  was  because  Illinois 
was  about  a  decade  behind  Indiana  in  her  economic  devel- 
opement  and  when  she  came  to  choose  her  laws,  she  found 
that  those  which  had  been  in  force  in  Indiana  a  decade  be- 
fore, better  fitted  her  needs  than  those  in  force  contempor- 
aneously, in  the  neighboring  state. 

At  almost  every  session  during  this  period,  the  legis- 
lature meddled  and  tinkered  more  or  less  with  the  revenue 
system.  Changes  were  often  made  one  year,  only  to  be 
repealed  the  next.  Governor  Ford,  in  speaking  of  the  con- 
dition of  law-making  before  1827,  said  :^ 

all  the  standard  laws  were  regularly  changed  and  altered  every  two  years, 
to  suit  the  taste  and  whim  of  every  new  legislature.  For  a  long  time, 
the  rage  for  amending  and  altering  was  so  great  that  it  was  said  to  be  a 
good  thing  that  the  Holy  Scriptures  did  not  have  to  come  before  the 
legislature;  for  that  body  would  be  certain  to  alter  and  amend  them,  so 
that  no  one  could  tell  what  was  or  was  not  the  word  of  God,  any  more 
than  could  be  told  what  was  or  was  not  the  law  of  the  State. 

Indeed  there  was  often  misunderstanding  even  on  the 
part  of  administrative  officials  as  to  exactly  which  laws 

ipord,  Hist,  of  III.,  p.  32. 

35 


36  HISTORY  OF  TAXATION  IN  ILLINOIS  [36 

were  in  force.  The  revisions  of  the  code  were  very  care- 
lessly made.  For  example,  the  first  territorial  legislature 
in  1812  declared  all  the  Indiana  laws  which  were  in  force 
on  March  1,  1809,  and  which  had  not  been  repealed  by  the 
governor  and  judges  during  their  regime  (1809-1812)  to  be 
the  laws  of  Illinois.^  Yet  a  revision  of  the  laws  of  Illinois 
made  in  1815  included  the  revenue  law  of  Indiana  almost 
exactly  as  it  stood  in  1807,  ignoring  the  changes  made  by 
Indiana,  from  1807  to  1809,  by  the  governor  and  judges  of 
Illinois,  from  1809  to  1812,  and  by  the  legislature  of  Illi- 
nois, from  1812  to  1815."  A  great  deal  of  confusion  of  this 
period  can  be  traced  to  this  compilation.* 

Property  Taxed  and  the  Rates  Imposed. 

The  Indiana  law  for  levying  a  territorial  tax  on  land 
which  was  nominally  adopted  by  the  governor  and  judges 
of  Illinois  in  1809,  was  evidently  little  used;  perhaps  the 
only  time  during  the  three  years,  1809  to  1812,  was  in  1809 
when  an  act  was  passed  which  provided  for  the  levy  of  a 
slight  tax  on  land,  the  maximum  rate  being  ten  cents  on  the 
one  hundred  dollars'  valuation.  But  here,  although  the 
machinery  of  the  territorial  tax  was  used,  the  tax  was  in 
reality  only  a  local  one,  for  the  income  went  not  to  the 

2L.  i8i2,  p.  5. 

^Revised  Laws,  1815,  p.  614. 

*In  the  first  section  of  the  law,  which  describes  the  property  subject 
to  taxation,  neat  cattle  were  omitted.  These  had  been  exempted  by  the 
law  passed  in  1810.  But  in  the  section  which  specified  the  rates  which 
were  to  be  levied  on  the  various  kinds  of  property,  neat  cattle  were  in- 
cluded. P.  614.  That  the  taxation  of  neat  cattle  was  really  not  intended 
by  the  legislature  is  shown  by  the  fact  that  in  1816  an  act  was  passed 
refunding  such  taxes  as  having  been  levied  by  mistake  by  the  courts  of 
Edwards  and  Gallatin  Counties.  L.  1816-17,  pp.  4-5;  L.  Terr.  Ill,  1809- 
181 1,  p.  28.  The  tax  on  each  free  male  inhabitant  who  did  not  pay  a  mini- 
mum land  tax  was  repealed  by  an  Indiana  law  in  1808.  It  was  reenacted  in 
1813  only  to  be  repealed  the  following  year.  This  tax  was  re-imposed 
by  the  law  published  in  the  compilation  of  1815,  the  section  being  copied 
from  the  Indiana  compilation  of  1807.  Manuscripts  in  the  office  of  the 
secretary  of  state,  acts  approved  December  11,  1813,  and  December  14, 
1814. 


37]  LEGISLATION,  1809-1838  37 

territory  but  to  the  counties  and  was  used  exclusively  for 
the  erection  of  county  buildings.^  It  seems  probable  that 
the  funds  received  from  the  fees  and  fines  proved  sufficient 
for  the  needs  of  the  territorial  government  from  1809  to 
1812.« 

One  of  the  important  questions  discussed  at  the  first 
session  of  the  territorial  legislature  in  1812,  was  that  of 
levying  a  tax  for  the  purpose  of  raising  a  territorial  rev- 
enue. As  soon  as  the  legislature  had  heard  the  governor's 
message  and  had  adopted  rules  of  order,  a  committee  was 
appointed  to  consider  how  a  fund  should  be  raised  to  sup- 
port the  territorial  government,  and  three  weeks  later  the 
governor  signed  a  bill  providing  for  the  levy  of  a  tax  for 
this  purpose."  Instead  of  the  land  tax  law  inherited  from 
Indiana  by  which  each  piece  of  land  was  separately  eval- 
uated, this  act  of  1812  reverted  to  a  scheme  similar  to  that 
which  had  been  in  force  in  the  Territory  of  Indiana  before 
1805.  The  land  was  roughly  grouped  into  three  classes 
according  to  quality:  the  bottom  lands  of  the  Ohio  and 
Mississippi  were  considered  first  grade  lands  and  were 
taxed  at  the  highest  rate,  one  dollar  per  hundred  acres; 
all  other  located  lands  in  the  state  were  rated  as  second 
class  lands  and  were  subject  to  a  tax  of  seventy-five  cents 
per  one  hundred  acres;  the  third  class  was  made  up  of  all 
claims  to  land,  confirmed  by  the  proper  authorities  but  not 
yet  located,  and  the  tax  on  this  class  was  thirty-seven  and 
one-half  cents  per  one  hundred  acres.^ 

^L.  Terr.  III.,  1809-11,  p.  8.  This  law  was  similar  to  the  Indiana  law 
of  1808.    Cf.  supra,  p.  22. 

*An  act  passed  in  1809  set  aside  certain  fees  and  fines  which  were  to 
constitute  a  fund  to  defray  the  expenses  of  the  territorial  government. 
Ibid.,  p.  10.  No  mention  is  made  in  the  executive  register  of  any  tax  on 
land  whose  proceeds  accrued  to  the  territorial  government. 

^Journal  of  the  House  of  Representatives,  in  E.  J.  James',  Territorial 
Records  of  Illinois,  1809-1818,  ///.  State  Hist.  Library  Pub.,  no.  3,  pp.  78, 
94,  100,  117;  L.  1812,  p.  17  et  seq. 

®It  may  be  worth  while  to  note  a  faw  passed  in  1813  and  repealed 
the  following  year  which,  in  a  sense,  was  supplemental  to  the  land  tax. 
This  law  imposed  an  annual  tax  of  fifty  cents  on  each  "free  male 
inhabitant"  in  the  territory,  over  twenty-one  years  of  age  who  did  not 


38  HISTORY  OF  TAXATION  IN  ILLINOIS  [38 

For  six  years,  until  the  state  had  been  admitted  into 
the  Union  in  1818,  the  act  of  1812  remained  in  force  with- 
out changes  of  importance.  The  division  of  the  property 
for  taxation  between  the  territorial  and  county  govern- 
ments remained  as  it  had  been  under  the  Territory  of  In- 
diana, land  being  taxed  by  the  territory  and  certain  speci- 
fied property  by  the  counties.  The  only  point  of  interest 
is  the  reversion  to  the  old  method  of  valuing  the  lands  by 
general  groups  rather  than  by  individual  appraisement. 

In  a  territory  where  a  form  of  the  general  property 
tax  had  been  known  and  used  since  the  time  of  its  organi- 
zation, it  is  rather  to  be  expected  that  this  system  should 
be  prescribed  in  the  constitution  when  that  territory  be- 
came a  state.  So  when  it  is  found  that  Illinois  stipulated 
the  general  property  tax  in  its  constitution  adopted  in 
1818,  discovery  is  not  a  surprising  one.  A  very  interesting 
fact  comes  to  light,  however,  when  one  endeavors  to  trace 
the  origin  of  this  constitutional  clause.  Then  it  appears 
that,  although  the  constitution  of  1818  was  copied  for  the 
most  part  from  the  constitutions  of  Kentucky,  Ohio,  and 
Indiana,®  no  tax  clause  such  as  this  appears  in  the  con- 
stitutions of  those  states.  And  furthermore,  when  the  ex- 
amination is  widened  to  include  all  the  state  constitutions 
adopted  prior  to  1818,  it  is  found  that  in  no  other  instance 
is  the  general  property  tax  prescribed  with  anything  ap- 
proaching the  definiteness  with  whicli  the  Illinois  clause 
commits  the  state  to  this  policy.  The  clause  appears, 
peculiarly  enough,  in  the  bill  of  rights  and  reads : 

That  the  general,  great  and  essential  principles  of  liberty  and  free  gov- 
fernment  may  be  recognized  and  unalterably  established,  we  declare :  .  .  .  . 
That  the  mode  of  levying  a  tax  shall  be  by  valuation  so  that  every  person 
shall  pay  a  tax  in  proportion  to  the  value  of  the  property  he  or  she  has 
in  his  or  her  possession. 

Strange  as  it  may  appear,  this  clause  in  the  Illinois 
constitution  seems  to  have  been  adopted  as  a  matter  of 
course  in  the  constitutional  convention.  It  was  included  in 
the  first  draft  of  the  constitution  as  originally  reported 

pay  an  annual  land  tax  to  the  territory.    Manuscript  in  the  office  of  the 
secretary  of  state,  approved  Dec.  ii,  1813,  and  repealed  Dec.  14,  1814. 
'Moses,  Illinois,  I,  284. 


39]  LEGISLATION,  1809-1838  39 

and  remained  unamended  throughout  the  entire  conven- 
tion.^*^ 

The  Maryland  constitution  of  1776  contains  the  clause 
which  most  nearly  approximates  the  one  found  in  the  Illi- 
nois constitution.     It  reads: 

XIII.  That  the  levying  of  taxes  by  the  poll  is  grievous  and  oppres- 
sive, and  ought  to  be  abolished;  that  paupers  ought  not  to  be  assessed 
for  the  support  of  the  government;  but  everj'  other  person  in  the  State 
ought  to  contribute  his  proportion  of  public  taxes,  for  the  support  of  the 
government,  according  to  his  actual  worth,  in  real  or  personal  property, 
within  the  State;  yet  fines,  duties,  or  taxes,  may  properly  and  justly  be 
imposed  or  laid,  with  a  political  view,  for  the  good  government  and 
benefit  of  the  community.^^ 

It  will  be  noted  here  that  the  final  clause  provides  a 
loophole  large  enough  to  allow  for  the  introduction  of  an 
entirely  different  system. 

Shortly  after  the  adoption  of  the  new  constitution 
(1818)  the  state,  for  the  first  time,^^  yielded  a  share  of  the 
land  tax  to  the  counties  and,  in  turn,  diverted  to  its  own 
coffers  some  of  the  revenue  from  the  taxes  on  personal 
property.^^  Three  types  of  property  were  to  be  taxed 
under  ordinary  circumstances — land,  bank  stock  and 
negro  slaves.  One  of  these,  bank  stock,  seems  to  have 
the  honor  of  being  the  first  species  of  intangible  property 
to  be  mentioned  in  an  Illinois  tax  law.  However,  when 
not  enough  revenue  was  received  from  the  tax  on  personal 
property  to  meet  both  state  and  county  expenses,  a  tax  for 
county  purposes  only  could  be  levied  on  "Town-lots,  car- 
riages for  the  conveniences  of  persons,  distilleries,  stock 
in  trade,  and  such  other  personal  property  as  they 
(through  their  county  commissioners)  may  think  pro- 
per."i* 

^Vounial  of  the  Convention,  i8i8,  p.  40,  et  seq. 

11 B.  P.  Poore,  Federal  and  State  Constitutions  (Washington,  1877), 
p.  818. 

^-Perhaps  the  unimportant  exception  of  the  slight,  special  land  tax 
of  1809,  for  county  buildings,  should  be  mentioned.    Supra,  pp.  36,  37. 

I'L.  1819,  p.  313  et  seq.  The  amount  received  by  the  state  from  the 
taxes  on  personal  property'  was  very  small,  indeed,  practically  all  of  the 
support  of  the  government  until  1833  coming  from  the  land  tax. 

i*The  power  to  tax  these  specified  articles  and  "such  personal  property 


40  HISTORY  OF  TAXATION  IN  ILLINOIS  [40 

No  provision  was  made  for  a  possible  shortage  in 
the  revenue  for  the  payment  of  state  expenses.  The  tax 
rate  on  all  property  was  fixed  at  one-half  of  one  per  cent 
per  annum  of  the  value  of  the  property.  The  state  was 
to  take  all  the  revenue  from  the  tax  on  bank  stock  while 
the  counties  were  to  receive  that  from  the  taxes  on  negro 
slaves.  The  revenue  from  the  tax  on  land  was  to  be  divid- 
ed between  the  state  and  the  counties;  the  former  w^as  to 

as  they  might  think  proper"  was  made  more  definite  by'acts  passed  later. 
Thus  in  1827  (R.  L.  1827,  p.  325  et  seq.),  some  additional  property  was 
specifically  mentioned  as  available  for  taxation,  as  horses,  mares,  mules, 
asses,  and  neat  cattle  above  three  years  of  age,  and  watches  and  their 
appendages.  In  1829  {R.  L.  1828-9,  p.  123),  ferries  were  added.  They 
were  to  be  assessed  on  the  basis  of  their  value  or  annual  income  and  not 
more  than  $300  was  to  be  collected  from  any  one  ferry  in  any  single 
year.  The  proceeds  of  this  tax  were  to  be  applied  to  the  opening  and 
repairing  of  roads  leading  to  the  ferry.  In  1823  (L.  1823,  p.  203  et  seq.), 
town-lots  were  to  be  taxed  by  the  counties  if  they  were  not  subject  to  a 
tax  of  one-half  of  one  per  cent  or  more  to  support  a  town  government. 
In  the  law  of  1827  (R.  L.  1827,  p.  325  et  seq.)  town  lots  were  declared 
taxable  for  county  purposes  if  not  taxed  by  the  trustees  of  the  towns. 
The  following  general  provision  was  found  tucked  away  in  a  special 
act  passed  and  published  the  same  year,  1827,  (Priv.  L.  1826-7,  p.  4), 
entitled  "An  act  for  the  relief  of  the  Town  of  America,  in  Alexander 
County,  and  for  other  purposes":  "Hereafter,  no  tract,  or  lot  of  land, 
lying  within  the  incorporation  of  any  town  or  village,  in  this  state, 
shall  be  liable  for  any  tax  except  for  county  or  corporation  purposes." 
This  is  somewhat  in  conflict  with  the  provision  of  the  general  law  quoted 
above.  If  lots  were  not  taxed  by  the  trustees  of  the  towns,  they  were 
subject,  according  to  the  general  law,  to  taxation  in  the  regular  manner, 
the  revenues  being  divided  between  the  counties  and  the  state.  This 
special  provision  would  seem  to  bar  the  state  from  receiving  its  share 
of  such  a  tax.    Whether  this  difficulty  arose  in  practice  is  not  known. 

A  slight  exemption  was  made  by  a  law  passed  in  1836  and  repealed 
about  a  year  later  (L.  1835-6,  p.  254;  L.  1836-7,  p.  49),  which  decreed  that 
such  bulls  as  might  be  designated  by  county  inspectors  as  suitable  for 
breeding  purposes  should  be  free  from  taxation. 

In  some  special  cases  the  leg^islature  exempted  particular  bits  of 
property  from  taxation  by  the  county  commissioners.  An  example  of 
this  is  an  act  passed  in  1819  (L.  181 9,  p.  44),  authorizing  John  Small  to 
build  a  toll  bridge.  The  minimum  rate  was  fixed  by  the  act  but  aside  from 
that  restriction,  the  county  commissioners  were  empowered  to  regulate 
the  rates.  But,  the  act  reads,  "said  bridge  shall  not  be  taxed  by  the 
county  commissioners  under  any  pretense  whatever."    A  peculiar  provision 


41]  LEGISLATION,  1809-1838  41 

have  all  from  the  lands  owned  by  non-residents  of  the  state, 
and  two-thirds  from  the  lands  owned  by  residents;  the 
counties  were  to  take  only  the  remaining  third  of  the  rev- 
enue from  the  resident  land  tax. 

The  class  to  which  a  piece  of  land  belonged  was  less 
arbitrarily  fixed  by  this  new  law  of  1819  than  under  the 
territorial  law ;  the  class  was  to  be  declared  by  the  owner, 
being  no  longer  determined  by  such  considerations  as  mere 
geographical  location.  Land  of  the  first  class  was  to  be 
valued  for  taxation  at  four  dollars  per  acre,  land  of  the 
second  class  at  three  dollars,  and  land  of  the  third  class  at 
two  dollars.  This  valuation,  subject  to  the  one-half  of  one 
per  cent  rate,  meant  a  tax  of  two  dollars  per  one  hundred 
acres  for  first  class  land,  one  dollar  and  fifty  cents  for 
second,  and  one  dollar  for  third.  Under  the  law  in  force 
during  the  territorial  period,  the  best  land  had  been  taxed 
one  dollar  per  one  hundred  acres  and  the  poorest  thirty- 
seven  and  one-half  cents  per  one  hundred  acres.  The  new 
law,  then,  at  least  doubled  the  tax  on  land  per  acre. 

After  the  passage  of  the  law  of  1819,  the  division  of 
the  revenue  from  the  tax  on  land  between  the  state  and  the 
counties  was  twice  readjusted  before  a  satisfactory  ar- 
rangement was  attained.  In  1821  the  counties  were  given 
two-thirds  of  all  the  land  taxes,  both  on  residents  and  non- 
residents, in  place  of  one-third  of  the  resident  land  tax 
which  had  been  their  share  by  the  law  of  1819.^^  At  this 
particular  time  the  condition  of  the  state  treasury  was 
excellent,  the  income  being  greatly  in  access  of  the  lia- 


was  that  contained  in  the  charter  of  the  Mount  Carbon  Coal  Company 
(L.  1834-5,  P-  194).  which  provided  that  when  the  dividends  should  exceed 
twelve  and  one-half  per  cent  per  annum,  the  company  should  pay  a  tax 
into  the  county  treasury,  evidently  exempting  the  property  of  the  ompany 
until  such  a  state  of  affairs  should  come  to  exist.  Interesting  also  are 
the  charters  of  two  railway  companies  (L.  1835-6,  p.  95,  Incorp.  L.  1836-7, 
p.  341),  which  specified  that  a  tax  of  one-half  of  one  per  cent  should  be 
laid  upon  the  amount  of  capital  actually  employed  in  the  companies  in 
lieu  of  all  taxes  upon  stock  and  property  for  both  state  and  county 
purposes. 

i^L.  1820-21,  p.   182. 


42  HISTORY  OF  TAXATION  IN  ILLINOIS  [42 

bilities.^^  But  this  state  of  affairs  did  not  long  continue, 
and  in  1823  the  state  found  it  necessary  to  recall  from  the 
counties  the  share  in  the  revenue  from  the  non-resident 
land  tax  granted  them  two  years  before,  leaving  them 
merely  the  two-thirds  of  the  resident  land  tax  and  the 
local  taxes  on  other  kinds  of  property. ^^  This  plan  of  di- 
vision held  for  the  remainder  of  the  period — until  1838. 

The  arrangement  under  which  non-residents  paid  their 
land  tax  to  the  state  and  residents  one-third  to  the  state 
and  two-thirds  to  the  counties,  had  several  interesting, 
incidental  effects.  Thus,  while  the  residents  contributed 
only  a  small  sum  to  the  support  of  the  state  government, 
and  the  non-residents  paid  no  local  taxes  whatever,  there 
w^as  considerable  bitterness  in  some  quarters  where  the 
percentage  of  land  owned  by  the  non-residents  was  high; 
for  the  residents  felt  that  they  were  bearing  the  entire  bur- 
den of  making  the  local  improvements  which  were  adding 
value  to  the  lands  of  the  non-residents.^^  It  is  impossible 
to  determine  how  far  this  state  of  affairs  tended  to  decrease 
the  sense  of  responsibility  of  the  state  legislators  who 
spent  the  state  money  but  represented  electors  who  con- 
tributed but  little  to  the  state  treasury;  but  it  is  evident 
that,  as  a  general  policy,  the  practice  was  an  unwise  one. 
In  its  immediate  results,  the  plan  was  fiscally  successful ; 
it  increased  the  state  revenues.  Yet,  even  at  best,  the  ar- 
rangement could  be  only  temporary,  for  it  was  almost  in- 
evitable at  this  period  that  the  land  should  come  more  and 
more  to  be  owned  by  residents  and  that  the  state  revenue 
should  therefore  decrease  pari  passu. 

In  1823  the  bank-stock  tax  was  abandoned.  It  had 
proved  of  no  significance  fiscally.^®    The  auditor's  report 

^'Governor's  Message,  Dec.  6,  1820.  5".  /.,  1820,  2  G.  A.,  i  Sess.,  p.  11. 
"It  is  pleasing  to  remark  upon  the  flourishing  condition  of  the  treasury. 
The  debt  of  the  late  territorial  government  has  been  extinguished;  the 
demands  against  the  treasury  bear  but  a  small  proportion  to  the  funds 
therein." 

i^L.  1823,  p.  203  et  seq. 

i*Ford,  op.  cit.,  p.  77. 

i»L.  1823,  p.  203  et  seq. 


43]  LEGISLATION,  1809-1838  43 

for  the  two  years,  1820-1822,  shows  that  less  than  one- 
hundred  dollars  ($97.77)  was  received  from  non-resident 
stock-holders  and  that  the  revenue  from  the  stock  owned 
by  residents  was  included  in  an  it^m  of  $7,268.23  which 
represented  the  total  amount  received  by  the  state  from  the 
local  collectors,  including  the  state's  share  in  the  residents' 
land  tax.  This  income  was  the  only  support  received  by 
the  state  government  from  a  tax  on  personal  property 
during  this  period,  the  entire  state  revenue  with  this  slight 
exception  being  raised  from  taxes  on  land. 

By  an  amendment  passed  in  1825,  counties  which 
found  themselves  unable  to  meet  expenses  under  the  one- 
half  of  one  per  cent  rate  were  permitted  to  increase  that 
rate  to  one  per  cent.^"'  But  two  years  later  this  rate  was 
again  reduced  to  the  old  mark.^^ 

An  act  of  1831  changed  this  classification  of  lands  for 
taxation  by  abolishing  the  third  class.^^  This,  of  course, 
had  the  efifect  of  raising  the  valuation  of  those  lands  which 
may  have  been  rated  as  third  class  lands  from  two  to  three 
dollars  per  acre. 

Eagerness  to  make  the  taxes  as  light  as  possible  to  new 
settlers  can  be  seen  in  the  special  provision  made  in  the 
law  of  1821  for  persons  who  were  paying  for  their  land  by 
installments.-^  "Lands  entered  and  purchased  from  the 
United  States",  the  law  reads,  "whereon  only  one,  two 
or  three  installments  of  the  purchase  money  shall  have 
been  paid,  shall  in  no  case  be  valued  higher  than  in  propo- 
tion  to  the  amount  of  money  actually  paid  thereon". 
With  the  enabling  act  in  force  which  released  newly 
purchased  lands  for  a  period  of  five  years  such  a  measure 
was  needed  only  to  care  for  cases  where  the  payments  for 
land  were  extended  over  a  long  space  of  time.  Perhaps 
this  law  may  be  assumed,  to  have  some  significance  as 
marking  the  earliest  attitude  of  the  state  toward  the  ques- 
tion of  the  deduction  of  debts. 

20L.  1824-5,  p.  172  et  seq. 

21/?.  L.  1826-7,  p.  325  et  seq. 

22L.  1830-1831,  p.  125  et  seq.  ^ 

23L.  1821,  p.  182  et  seq. 


44  HISTORY  OP  TAXATION  IN  ILLINOIS  [44 

It  is  evident  from  this  survey  that,  although  not  all 
property  was  taxed  by  each  governmental  authority,  taxes 
were  levied  upon  nearly  all  the  objects  of  value  in  the  com- 
munity. Such  exemptions  as  were  made  were  demanded 
by  the  social  exigencies  of  the  times.  It  was  a  composite 
system  and  a  more  or  less  haphazard  one,  the  state  taxing 
some  types  of  property  and  the  localities  others.  This 
division  of  property  for  the  purposes  of  taxation  varied 
slightly  from  time  to  time.  The  main  support  of  the  state 
was  the  tax  on  land.  The  counties,  however,  shared  in 
this  tax  after  1819.  They  received  all  the  proceeds  from 
the  personal  property  taxes,  except  those  from  the  tax 
on  bank  stock  which  were  negligible  in  amount.  Land, 
as  the  most  valuable  item  in  the  social  wealth,  bore  the 
largest  share  of  the  burden.  The  rates,  although  raised 
sharply  in  1819  and  again  in  1831,  were  much  lower  all 
through  the  period  than  they  are  at  the  present  time. 
Finally  the  tax  was  a  charge  primarily  upon  the  ''thing" 
rather  than  upon  the  "person"  and  was,  in  form,  a  per- 
centage rather  than  an  apportioned  tax. 

Assessment  Methods. 

As  might  be  expected  the  methods  of  assessing  the 
taxes  were  very  crude.  During  the  greater  part  of  the 
period  under  consideration,  the  procedure  for  listing  the 
property  of  residents  was  that  outlined  in  the  law  of  1812 
which  was  briefly  as  follows:  the  official  assessor  would 
advertise  a  date  on  which  he  would  be  present  in  a  town-  ■, 

ship ;  on  that  day  residents  of  the  township  who  owned  tax-  | 

able  property  would  present  themselves  at  the  place  ad- 
vertised and,  having  been  sworn,  would  list  their  property  t 
with  the  assessor;  penalties  for  failure  to  list  or  for  fraud          | 
were  provided ;  the  assessor  would  then  make  up  the  neces- 
sary lists  and  turn  them  over  to  the  proper  officials.^*          j 
Few  changes  were  made  in  this  system  until  1827  when          1 
there  was  substituted  for  this  very  primitive  method  the 
more  modern  one  by  which  the  assessor  called  at  the  resi- 

2*L.  i8i2,  p.  ly  et  seq. 


45]  LEGISLATION,  1809-1838  45 

dence  of  each  property  owner  and  demanded  a  statement 
of  his  property .^^  If  the  property  owner  was  not  at  home, 
this  law  provided  that  the  assessor  should  estimate  the 
value  of  the  property  to  the  best  of  his  ability,  holding  the 
estimate  subject  to  revision  upon  complaint  of  the  person 
assessed.  This  new  system  was  evidently  necessary  to 
secure  the  listing  of  personal  property  in  particular,  for  in 
counties  where  no  tax  on  personalty  was  levied,  the  assessor 
was  not  required  to  call  at  the  residence  of  the  property 
owner. 

From  the  present  day  standpoint  the  penalties  im- 
posed under  this  system  seem  harsh  and  unusual.  By  the 
law  of  1812,  in  any  case  of  fraud  in  listing,  all  the  property 
involved  was  to  be  forfeited  to  the  state.^^  This  law  was 
repealed  in  1814  and  the  property,  instead  of  being  con- 
fiscated in  such  cases,  was  declared  subject  to  a  triple 
tax.^'^  The  triple  tax  was  at  this  time  also  imposed  for 
mere  neglect  on  the  part  of  the  owners  to  list  their  pro- 
perty.^^  In  1817  a  five  dollar  fine  was  added  to  the  pen- 
alty for  each  case  of  fradulent  listing,^^  By  the  law  of 
1821  the  penalty  of  the  triple  tax  for  failure  to  list  was 
somewhat  accentuated  by  the  provision  that  land  not  listed 
regularly  by  the  owner  should  be  considered  first  class 
land  and  the  triple  tax  levied  on  that  basis.^*'  Then,  per- 
haps in  disgust  at  the  inefficiency  of  the  heavy  penalties, 
the  legislature  in  1821  swept  them  all  away — but  only  to 
reenact  another  set  two  years  later.^^  These  new  penalties 
were  a  triple  tax  for  fraudulent  listing  and  a  double  tax 
for  neglect  or  refusal  properly  to  list  the  property  for 
taxation.^2 

-'^R.  L.,  1826-7,  P-  325. 

-^L.  1812,  p.  17  et  seq. 

-^Manuscript  in  office  of  secretary  of  state,  dated  Dec.  i,  1814. 

^^Ibid.,  Dec.  8,  1814.  A  law  passed  Dec.  8,  1814,  provided  that  any 
land  which  had  been  forfeited  under  the  act  of  1812,  might  be  redeemed 
by  paying  the  triple  tax. 

29L.  1816-17,  p.  45.  ' 

30L.  1819,  p.  313  et  seq. 

31L.  1821,  p.  182  et  seq. 

321,.  1823,  p.  17  et  seq. 


46  HISTORY  OF  TAXATION  IN  ILLINOIS  [46 

Practice  varied  in  regard  to  the  particular  oflftcers 
designated  to  list  the  property  subject  to  taxation.  By 
the  law  of  1809,  the  sheriff  was  made  responsible  for  this 
work  so  far  as  the  county  levies  were  concerned.^^  Under 
the  Indiana  law  this  had  been  done  by  two  free-holders 
in  each  township.  But  all  was  changed  by  the  law  of 
1812,  by  which  the  assessment  for  both  county  and  terri- 
torial taxes  was  assigned  to  an  appointed  commissioner  in 
each  county.^^  Two  years  later,  in  1814,  county  treasur- 
ers, appointed  by  the  governor,  were  given  the  task  of  list- 
ing the  lands  for  the  territorial  tax,^^  and,  in  1815,  the 
assessments  for  county  levies  were  again  assigned  to  two 
free-holders  in  each  township,  according  to  the  old  Indiana 
plan.^^  This  reenactment  of  the  Indiana  law  of  1808  was 
evidently  an  unintentional  blunder,  for  haste  was  made  to 
repeal  it  and  to  reestablish  the  provisions  of  the  law  of 
1812.^'  By  the  law  of  1819  the  assessment  in  each  county 
remained  in  the  hands  of  a  single  appointed  official  but  he 
was  now  called  a  treasurer  rather  than  a  commissioner.^® 
For  two  years,  1825-27,  this  officer  was  called  an  asses- 
sor,^* but  after  1827  the  treasurer  was  the  officer  in  charge. 
It  is  seen,  then,  that  almost  without  exception  the  listing 
and  appraising  of  property  for  taxation  before  1837  was 
done  by  a  single  assessor  in  each  county,  who  was  an  ap- 
pointed rather  than  an  elected  official. 

As  early  as  1812,  residents  were  required  to  make 
oath  to  the  correctness  of  their  lists  of  property,  as  given 
to  the  assessor.^*^  In  1817  the  oath  was  made  very  specific. 
It  read  as  follows: 

I,  A.  B,,  do  solemnly  swear  or  affirm,  as  the  case  may  be,  that  this 
list  contains  a  true  and  perfect  account  of  all  persons,  and  every  species  of 

83L.,  Terr.  Ill,  1809-11,  p.  7- 

"L,  1812,  pp.  17,  31. 

86  Passed  Dec.  24,  1814.  R.  L.  181 5,  p.  500. 

3«/e  .L.  1815,  p.  614. 

8^1.  1816-7,  p.  45  et  seq. 

8«L.  1819,  p.  313  et  seq. 

S9L.  1824-5,  p.  172;  R.  L.   1826-7,  p.  325. 

*°L.  1812,  pp.  17,  31. 


47]  LEGISLATION,  1809-1838  47 

property  belonging  to  or  in  my  possession  or  care,  subject  to  taxation, 
jnd  that  no  contract,  change  or  removal  whatever  has  been  made  or 
entered,  or  any  other  mode  advised  or  used  to  evade  the  paj-ment  of 
taxes.*^ 

The  oath  was  retained  as  part  of  the  STstem  by  the  law 
of  1819.-*2  In  1821,  the  eflBciency  of  this  plan  as  a  means 
of  securing  full  valuation  was  evidently  questioned,  for 
power  was  given  to  the  assessor  to  go  behind  the  sworn  list 
submitted  by  the  property  owner.*^  In  cases  where  he  be- 
lieved the  valuation  to  be  too  low,  he  was  directed  to  call 
the  matter  to  the  attention  of  the  county  commissioners 
who  were  to  give  a  hearing  to  the  property  owner,  and,  if 
he  were  unable  to  show  why  his  property  should  not  be 
rated  higher,  they  were  to  assess  him  on  the  basis  of  the 
higher  valuation. 

A  most  interesting  change  was  made  by  the  law  of 
1829.  At  this  time,  strange  to  say,  the  oath  was  given  up 
as  an  instrument  for  securing  a  full  assessment.  The  law 
reads : 

Whenever,  in  the  opinion  of  the  county  treasurer,  any  person  shall 
list  his  property  below  its  real  value,  it  shall  be  the  duty  of  said  treasurer 
to  alter  the  valuation  thereof,  in  such  manner  as  to  make  it  as  nearly  equal 
to  the  general  valuation  of  the  same  species  of  property  as  possible;  and 
no  person  shall  be  compelled  to  value  his  property  under  oath.** 

It  would  be  interesting  to  determine  the  effect  of  this 
change  in  the  law ;  but  so  far  as  it  is  possible  to  make  any 
statement  from  the  data  available,  the  presence  or  absence 
of  the  oath  requirements  seems  to  have  had  little  effect 
upon  the  assessment,  one  way  or  the  other.  The  data  are 
very  unsatisfactory,  however;  and  the  state  was  increas- 
ing so  rapidly  in  wealth  and  population  at  this  time  as 
to  make  comparisons  of  one  year  with  another  almost 
valueless. 

Property  belonging  to  non-residents  was  assessed 
under  a  plan  entirely  different  from  the  one  outlined 
above.     Under  the  law  of  1812  such  property  was  to  be 


41L.  1816-7,  p.  46. 
*2L.  1819,  p.  313  et  seq. 
*^L.  1820-21,  p.  182  et  seq. 
**R.  L.  1828-9,  p.  121  et  seq. 


48  HISTORY  OF  TAXATION  IN  ILLINOIS  [48 

listed  annually  by  the  owner  with  the  state  auditor.*^  In 
1816  the  law  was  made  more  detailed  and  explicit.*^  The 
auditor  was  empowered,  in  case  of  neglect  on  the  part  of 
the  owner,  to  list  the  land  according  to  the  best  informa- 
tion he  could  procure.  Annual  registration  with  the  audi- 
tor was  made  unnecessary  by  the  law  of  1823.  Once  listed, 
the  property  was  to  stand  until  a  transfer  in  ownership 
was  made.*''^ 

Persons  owning  land  in  counties  other  than  those  in 
which  they  resided  were  directed  by  the  law  of  1827  to  list 
their  land  with  the  state  auditor  in  the  same  manner  as 
non-residents.^^  In  1829,  they  were  given  the  option  of 
listing  such  land  with  the  state  auditor  or  with  the  county 
oflBLcials^^;  but,  in  1835,  the  county  officials  were  directed 
to  administer  an  oath,  in  such  cases,  that  the  bona  fide 
owner  of  the  land  resided  in  the  state.^*^  This  law  had 
been  necessitated  by  the  fact  that  agents  frequently  listed 
land,  belonging  to  non-residents,  in  their  own  names.  This 
practice,  aside  from  confusing  the  classification  upon  which 
rested  the  division  of  the  revenues  between  the  counties 
and  the  state  government,  was  the  cause  of  loss  to  the 
state  through  the  seven  and  one-half  per  cent  fee  which  was 
paid  to  the  county  sheriffs  for  collecting  such  taxes.^^ 

The  arrangement  for  the  assessment  of  bank  stock, 
which  was  taxable  for  state  purposes  in  the  early  twenties, 
is  worthy  of  note.^^  This,  it  will  be  recalled,  was  the  first 
attempt  to  tax  intangible  personal  property.  Evidently 
the  difficulty  of  securing  a  return  of  such  property  was 
apparent,  for  the  law  required  the  banks  located  within 
the  state  to  cooperate  in  the  assessment  by  furnishing  the 

*'^L.  i8i2,  p.  17. 
*«L.  181  s-6,  pp.  57-61. 
*''L.  1823,  p.  203. 
*8L.  1826-7,  p.  325. 
*^R.  L.  1828-9,  P-  "9  et  seq. 
»0L.  1834-5,  p.  51. 

'^5.  /.,  9  G,  A.,  I  Sess.,  p.  174.    The  auditor's  reports  show  that  these 
refunds  were  very  insignificant  in  amount. 
'2L.  1819,  p.  313  et  seq. 


49]  LEGISLATION,  1809-1838  49 

county  treasurers  with  lists  of  the  resident  stock-holders. 
The  treasurers  then  were  required  to  inform  one  another 
by  an  exchange  of  communications,  of  stock  owned  by  resi- 
dents of  various  counties,  very  much  as  the  lists  of  mort- 
gage owners  are  exchanged  in  some  states  at  the  present 
time. 

In  general  these  assessment  methods  were  so  exceeding- 
ly primitive  that  it  seems  remarkable  that  they  secured  the 
listing  of  any  property  at  all.  Before  1827,  the  property 
owner  was  depended  upon  not  only  to  assess  himself  but 
also  to  hunt  out  the  assessor  in  order  to  declare  his  proper- 
ty. The  penalties  were  very  heavy,  it  is  true,  being  double 
and  triple  the  amount  of  the  tax  for  neglect  or  fraud.  But 
the  practice  of  depending  upon  penalties  to  enforce  laws 
has  usually  been  far  from  successful.  Heavy  penalties 
were  more  likely  to  be  effective  at  this  stage  than  later, 
however,  for  all  property  was  of  the  sort  which  was  dif- 
ficult to  conceal,  so  that  the  risk  of  detection  in  cases  of 
fraud  was  relatively  large. 

Collection  Methods. 

The  method  of  collecting  the  taxes  was  quite  simple. 
The  list  of  resident  tax  payers  was  given  to  the  sheriff  who 
proceeded  to  collect  the  amounts  charged  to  each  individu- 
al.^^ After  1827  the  sheriff  was  directed  to  call  at  each 
person's  residence  and  demand  payment.^*  Heretofore, 
this  had  not  been  required.  Collection  was  enforced  by 
distress  and  sale.  The  taxes  of  non-resident  land  owners 
were  payable  for  most  of  the  period  at  the  state  treasury. 

A  date  was  fixed  on  which  the  sheriff  was  required  to 
account  for  the  money  collected  by  him  ^'  and  heavy  pen- 

53L.  i8i2,  p.  2o;  L.  1819,  p.  Z^3  et  seq. 

5*R.  L.  1826-7,  p.  325  et  seq^  All  through  the  period  the  sheriflF  was  the 
9fficer  in  charge  of  the  collection  of  the  taxes  of  the  residents.  He  re- 
ceived as  his  compensation  a  percentage  of  his  collections.  Seven  and 
one-half  per  cent  was  the  usual  rate.   ' 

5'This  date  was  often  changed  during  the  period.  For  a  time  it  was 
December  i ;  then  it  was  changed  to  November  i ;  then  to  December  10 
etc.    L.  1812,  p.  19;  Manuscript  in  the  office  of  secretary  of  state,  Dec.  24, 


50  HISTORY  OF  TAXATION  IN  ILLINOIS  [50 

alties  were  provided  for  delay  in  turning  the  funds  into  the 
proper  treasuries.^^ 

When  the  sheriffs  found  it  impossible  to  collect  the 
taxes,  they  were  empowered,  by  the  law  of  1812,  to  sell  the 
property  after  a  forty  day  notice,  and  to  pay  the  taxes 
out  of  the  proceeds.^ ^  Land  was  not  to  be  sold  for  taxes 
if  there  was  suflftcient  personal  property  to  make  up  the 
amount  of  the  tax.  The  laws  passed  later  in  the  period 
merely  elaborated  this  procedure.  Thus,  the  law  of  1829 
only  changed  the  code  by  specifying  in  detail  the  methods 
to  be  used  in  advertising  property  for  sale.^^  Until  1833 
the  state  conducted  the  tax  sales  of  the  property  of  non- 
residents ;  but,  at  that  time,  the  task  was  assigned  to  coun- 
ty officials  who  turned  over  the  receipts  to  the  state  treas- 
ury.'** 

Arrangements  were  made  whereby  persons  whose  pro- 
perty was  sold  for  taxes  could  redeem  it  within  a  reason- 
able time.  This  redemption  period  was  made  two  years 
in  1812.««  From  1821  to  1827,  the  period  was  shorter, 
one  year,  but  then  at  the  suggestion  of  Governor  Coles  it 
was  again  lengthened  to  two  years.^^  In  1819,  for  minor 
heirs,  it  was  lengthened  until  one  year  after  the  date  when 
the  youngest  heir  should  become  of  age.  This  provision 
held  through  the  rest  of  the  period.^ ^  The  person  seeking 
to  recover  his  property  sold  at  a  tax  sale  had  to  pay  a  large 
premium  to  the  purchaser.     By  the  law  of  1812  he  was 

j8i4;  L.  1817-8,  p.  41 ;  L.  1819,  p.  313  et  seq.;  R.  L.  1826-7,  p.  325  et  seq.; 
L.  1836-7,  p.  194. 

'^^In  1818  the  penalty  was  made  one  per  cent  per  day;  in  1823  it  was 
changed  to  one  per  cent  per  week  for  state  funds  and  one  per  cent  per 
month  for  the  county  funds ;  and,  finally  in  1827,  it  was  made  one  per  cent 
per  week  for  counties  also.  L.  1817-8,  p.  41;  L.  1823,  p.  203  et  seq.;  R.  L. 
1S26-7,  p.  325  et  seq. 

"L.  1812,  p.  20. 

»8/?.  L.  1828-9,  p.  122. 

"i?.  L.  1832-3,  p.  528. 

*^L.  1812,  p.  20. 

*^R.  L.  1826-7,  p.  325  et  seq.;  L.  1820-21,  p.  182  et  seq.;  S.  J.,  5  G.  A., 
1  Sess.,  p.  26. 

«2L.  1819,  p.  313  et  seq. 


51]  LEGISLATION,  1809-1838  51 

compelled  to  pay  the  person  who  had  bought  his  property 
the  purchase  price  plus  one  hundred  per  cent.  For  part 
of  the  period  the  penalty  stood  at  this  figure  and  part  of 
the  time  at  fifty  per  cent,  the  proportion  being  changed 
from  one  figure  to  the  other  several  times.^^ 

Property  sold  to  the  state  for  taxes  could  be  redeemed, 
under  the  law  of  1827,  by  paying  the  purchase  price,  plus 
fifty  per  cent  and  subsequent  taxes.^^  In  1833  the  fifty 
per  cent  penalty  was  removed  and  there  was  substituted  an 
interest  charge  of  six  per  cent  per  annum  on  the  amount  of 
the  taxes  and  costs.®^ 

In  cases  where  property  was  twice  sold  for  taxes  with- 
in three  years,  it  was  arranged,  in  1829,  that  the  original 
owner  could  redeem  by  paying  the  purchase  price  and  the 
costs  of  the  first  sale  and  double  the  amount  of  the  pur- 
chase price,  interest  and  costs  of  the  second  sale.^^ 

Special  County  Levies  and  Municipal  Taxes. 

Aside  from  the  general  uses  to  which  the  general  prop- 
erty tax  was  put,  mention  should  be  made  of  the  county 
levies  for  various  special  purposes  and  the  utilization  of 
the  general  property  tax  in  municipal  finance.  The  county 
levies  for  special  purposes  were  made  then  by  the  county 
commissioners.  Usually,  though  not  always,  such  levies 
were  authorized  by  special  acts  of  the  legislature,  which 
permitted  the  commissioners  to  order  the  collection  of  an 
additional  rate  for  some  particular  object  upon  the  property 
ordinarily  taxable  for  county  purposes.   These  objects  were 

•^The  penalties  were : — 

i8i2,  Purchase  price  plus  one  hundred  per  cent. 
1821,  Purchase  price  plus  fifty  per  cent,  plus  cost  for  advertising. 
1823,  Purchase  price  plus  one  hundred  per  cent. 
1825,  Purchase  price  plus  fifty  per  cent. 

1827,  Purchase  price  plus  one  hundred  per  cent,  plus  interest  and 
costs  and  interest  on  subsequent  taxes.     L.   1812,  p.  20;  L. 
1820-21,  p.  182  et  seq.;  L.  1823,  p.  203  et  seq.;  L.  1824-5,  P- 
172  et  seq.,  and  R.  L.  1826-7,  p.  325  et  seq. 
^*R.  L.  1826-7,  P-  325  et  seq. 
*^R.  L.  1832-3,  p.  528.  > 

•«/?.  L.  1828-9,  p.  122. 


52  HISTORY  OF  TAXATION  IN  ILLINOIS  [52 

always  specified;  they  included  schools,  bridges,  roads, 
county  buildings,  and  the  improvement  of  navigation  of 
rivers.  One  of  the  most  important  of  these  special  taxes 
was  one  authorized  by  a  general  law  in  1825  which  per- 
mitted the  county  commissioners  in  any  county  of  the  state 
to  levy  a  general  property  tax  for  road  purposes.^  ^ 

Before  1825  no  provision  had  been  made  for  the  build- 
ing and  maintenance  of  roads  aside  from  a  poll  tax,  pay- 
able in  labor  on  the  roads,  and  whatever  the  counties  might 
care  to  undertake  and  pay  for  out  of  ordinary  revenues. 
The  state,  indeed,  occasionally  made  a  small  appropri- 
ation toward  the  expenses  of  laying  out  a  new  road.®® 
But  this  new  law  provided  a  distinct  revenue  for  road  pur- 
poses. Power  was  given  to  the  county  commissioners  of 
the  various  counties  to  levy  a  maximum  rate  of  one  dollar 
and  fifty  cents  on  every  one  hundred  dollars'  worth  of  tax- 
able property.  The  counties  were  divided  into  road  dis- 
tricts and  supervisors  were  appointed  for  each  district  to 
see  that  the  property  owners  discharged  the  tax  in  labor  on 
the  roads  or  commuted  it  by  providing  a  substitute  to  do 
the  work  for  them.  This  bill  was  in  force  only  two  years, 
being  repealed  by  the  legislature  of  1826-27.®^  Governor 
Ford  gives  for  the  cause  of  the  repeal  of  this  law  the  hatred 
of  the  people  for  taxation.'^*^     The  rate  however  was  quite 

•^L.  1825,  p.  27. 

**Sums  were  expended  from  the  state  treasury  for  roads  and  bridges 
during  this  period  as  follows : — 

Roads  Bridges  Total 

Jan.  I,  1823,  to  Nov.  30,  1824 $3,556.66  $3,556.66 

Two  years  ending  Nov.  30,  1826. 2,344.50 2,344.50 

Two  years  ending  Nov.  30,  1828 3,228.56  $  880.00  4,108.56 

Two  years  ending  Dec.  i,  1830 1,700.00  1,100.00  2,800.00 

Two  years  ending  Dec.  i,  1832 97.62  1,048.50  1,146.12 

Two  years  ending  Dec.  i,  1834. 2,296.64  300.00  2,596.00 

Two  years  ending  Nov.  30,  1836 

Dec.  3,  1836,  to  Dec.  i,  1838 780.00  780.00 

«»L.  1827,  p.  47;  Ford,  Hist,  of  III.,  pp.  58-60.  The  poll  (labor)  tax 

was  continued.  Bridges  were  kept  in  repair  from  the  county  road  tax. 
L.  1827,  p.  62. 

""^Supra.,  pp.  28,  29. 


53]  LEGISLATION,  1809-1838  53 

high  and  some  of  the  opposition  was  probably  warranted. 
In  its  operation  the  law  seems  to  have  been  eminently  suc- 
cessful. "The  roads  were  never  before  nor  since  in  such 
good  repair. . ."  is  the  testimony  of  Ford,  a  number  of 
years  afterward.^^ 

After  the  repeal  of  the  road  law  in  1827  no  taxes  of 
this  sort  were  levied  until  1831  when  a  much  weaker  law 
was  passed  which  made  property  the  basis  for  a  charge 
in  case  a  three-day  labor  requirement  was  not  sufficient. 
The  rate  was  one  day's  labor  for  every  one  hundred  dollars 
worth  of  property.  For  commutation  purposes  a  day's 
labor  was  to  be  reckoned  at  fifty  cents.''^^ 

In  1835  a  different  arrangement  was  made.  A  tax 
could  be  levied  for  road  purposes  either  on  real  estate  or 
on  personal  property,  but  not  on  both  the  same  year."^^ 
If  on  real  estate,  the  tax,  at  the  most,  could  be  equal  to  one- 
half  of  the  state  tax  collected  in  that  county.  If  on  per- 
sonal property,  the  maximum  rate  was  twenty-five  cents 
on  every  one  hundred  dollars  worth  of  property.  The 
commutation  rate  was  seventy-five  cents  per  day,  but  by 
1845  it  had  been  raised  to  one  dollar. ^^ 

The  amount  which  could  be  collected  for  roads  was 
limited  in  1836^^  to  one-third  of  the  county  receipts  of  the 
previous  year. 

In  this  same  year,  1825,  when  the  first  road  law  was 
passed,  there  was  also  passed  a  school  law  which  provided 
for  the  levy  of  a  tax  similar  to  the  road  tax.  The  rate  was 
not  to  exceed  one-half  of  one  per  cent.  This  law  suffered 
the  same  fate  as  the  road  law,  becoming  unpopular  with  the 
people  and  being  repealed  in  1827.  A  voluntary  tax  was 
enacted  in  its  place  under  which  no  person  could  be  taxed 
without  his  consent  in  writing.^® 

^^Ford,  op  cit.,  p.  58. 
''-L.  1830-31,  p.  159. 
73L.  1835,  p.  129. 

7</?.  5".,  1845,  p.  485  et  seq.  ' 

"L.  1835-6,  p.  207. 

^«J.  M.  Peck,  A  Gazetteer  of  Illinois  in  Three  Parts  (2  ed.,  Philadel- 
phia, 1837,)  p.  66;  L.  1827,  p.  364. 


54  HISTORY  OF  TAXATION  IN  ILLINOIS  [54 

A  good  example  of  the  tax  levied  for  bridge  purposes 
is  that  of  an  act  passed  in  1831,  "authorizing  the  County 
Commissioners'  Court  of  Shelby  County  to  levy  a  tax  for 
certain  purposes."  It  permitted  the  commissioners  to  levy 
a  tax  on  land  and  personal  property  for  the  purpose  of 
building  a  bridge  over  the  Kaskaskia  River.  No  limitation 
was  put  on  the  rate.  The  sheriff's  collection  fee  was  re- 
stricted to  five  per  cent.^'  In  1824  the  legislature  author- 
ized the  commissioners  of  Sangamon  County  to  collect  a  tax 
of  not  less  than  one-fourth  nor  more  than  one-half  per  cent 
on  all  the  taxable  property  in  the  county  for  the  purpose 
of  improving  the  lower  course  of  the  Sangamon  River.  A 
referendum  to  the  people  was  provided. ^^  County  buildings 
were  some  times  paid  for  under  this  same  arrangement. 
Thus,  in  1825,  the  Gallatin  County  commissioners  were 
required  to  lay  a  tax  of  one  and  one-half  per  cent  upon  the 
value  of  all  property  subject  to  county  taxation,  to  build 
a  court  house  and  jail."  The  court  house  of  Crawford 
County  was  built  with  the  proceeds  of  a  tax  of  one  per  cent 
on  the  property  of  the  taxable  inhabitants.*'^  Legislation, 
of  which  the  acts  quoted  above  are  typical,  was  very  com- 
mon all  through  the  period  under  discussion.  At  every 
session  many  such  laws  were  passed  and  the  county  taxes 
collected  under  this  arrangement  must  have  made  up  a 
large  proportion  of  the  total  county  receipts. 

Although  throughout  this  early  period  the  towns  were 
small,  the  beginnings  of  municipal  taxation  are  to  be  found 
in  the  legislation  of  these  years.  The  powers  of  towns  to 
act  as  public  corporations  came,  for  the  most  part,  through 
special  charters  granted  by  the  legislature.  In  1831  a 
general  incorporation  law  was  also  passed,  "  but  it  was 
merely  permissive  in  character  and  most  of  the  munici- 
palities, continued  even  after  its  passage,  to  go  to  the  legis- 
lature for  special  charters. 

"L.  1830-31,  p.  23. 
78L.  1824-25,  p.  28. 
T»L.  1824-25,  p.  165. 
^'^Private  L.  1832-33,  p.  28. 
"  L.  1830-31,  p.  82. 


55]  LEGISLATION,  1809-1838  55 

It  is  to  be  expected  that  under  such  a  system  there 
should  be  the  greatest  diversity  among  the  powers  granted 
to  various  municipalities.  In  respect  to  the  property  sub- 
ject to  taxation,  however,  the  practice  was  fairly  uniform. 
During  the  early  part  of  the  period,  it  was  not  usual  to 
designate  specifically  all  property  subject  to  taxation  for 
municipal  purposes;  with  but  one  exception,  the  charters 
granted  during  these  early  years  specified  that  only  the 
town  lots  lying  within  the  corporate  limits  "without  refer- 
ence to  the  value  of  houses  or  other  improvements''  should 
be  made  the  basis  for  the  levy  of  taxes.  The  exception  is 
the  Mt.  Carmel  charter  of  1825  which  designated  that  the 
tax  should  be  laid  on  both  "the  real  property  in  such  town 
and  on  personal  property  owned  by  persons  living  in  such 
town."^-  Somewhat  later  in  the  period  it  became  custom- 
ary to  declare  "real  estate"  taxable,  without  further  defin- 
ing the  term.  In  1837  Chicago  was  granted  a  city  charter 
which  authorized  the  common  council  to  levy  a  tax  upon 
"real"  or  "personal  estate."  There  are  scattered  examples 
of  similar  grants  of  power,  as  in  1835  (Mt.  Carmel),  and 
1840  ( Carmi )  .^^  During  the  same  year  charters  were  also 
granted  to  the  city  of  Alton  and  the  town  of  Ottawa,  which 
finally  designated  that  all  property  should  be  used  as  the 
basis  for  the  levy.*^  Taxes  were  to  be  levied  in  the  case  of 
Ottawa,  "upon  all  real  estate  and  personal  property,"  and 
in  the  case  of  Alton  upon  the  "real  and  personal  property 
within  the  limits  of  said  city."  About  the  same  time  a  sim- 
ilar charter  was  given  to  Galena.^^ 

The  levj'  of  a  municipal  tax  usually  exempted  the  pro- 
perty within  the  corporate  limits  from  any  county  tax.  So 
it  would  seem  that,  except  in  such  scattered  cases  as  those 
mentioned  above,  the  general  property  tax,  strictly  defined, 
did  not  exist  in  the  municipalities  of  Illinois  during  this 

*2L.  1824-25,  p.  72. 

*3L.  1836-37,  p.  so.  Real  estate  was  made  taxable  by  the  general  law 
of  1831,  by  the  Chicago  charter  of  1835  and  the  Lower  Alton  amendment 
of  1835.    L.  1834-5,  PP-  172,  210;  L.  1839-40,  p.  70. 

^*L.  Sp.  Sess.  1837,  pp.  17,  96. 

^^Incorp.  L.,  1836-37,  p.  16. 


56  HISTORY  OF  TAXATION  IN  ILLINOIS  [56 

early  period.  How  this  condition  was  reconciled  with  the 
provision  of  the  state  constitution  requiring  the  general 
property  tax  is  not  evident;  the  question  appears  not  to 
have  been  raised. 

The  maximum  rates  which  were  specified  in  these  early 
charters  varied  from  one-fourth  of  one  per  cent  to  four  per 
cent,  upon  the  value  of  the  property  designated  for  tax- 
ation. Most  of  the  acts,  and  particularly  those  passed  by 
the  later  legislature  set  the  rate  at  one-half  of  one  per 
cent.®' 

As  in  the  case  of  the  counties,  power  was  sometimes 
granted  to  municipalities  to  levy  rates  for  special  purposes. 
Thus  by  a  law  of  1821,  the  trustees  of  the  town  of  Alton 
were  permitted  to  levy  a  tax  on  all  town  lots  not  exceeding 
seventy-five  cents  per  lot  per  annum  for  the  support  of 
schools.®^  In  1837  Alton  was  again  empowered  to  levy  a 
school  tax.**  By  this  act  the  council  was  authorized  to 
assess  upon  the  real  estate  of  the  city  the  sums  necessary  to 
purchase  lots  and  erect  buildings,  and  to  assess  upon  per- 
sonal property  a  tax  suflftcient  to  raise  the  necessary  sums 
for  the  support  of  the  schools.  The  rate  was  not  to  exceed 
one-fourth  of  one  per  cent  and  the  receipts  were  to  consti- 
tute a  fund  to  be  used  exclusively  for  the  support  of  the 
common  schools.*^ 

A  spirit  of  rivalry  often  rose  between  towns  desiring 
to  be  designated  as  the  county  seat  and  to  secure  the  lo- 

s'The  following  list  of  references  to  charters  granted,  grouped  ac- 
cording to  the  tax  rates  specified,  will  give  more  specific  information  on 
this  point : 

One-fourth  of  one  per  cent— L.  1835-6,  p.  180. 

One-half  of  one  per  cent— L.  1823,  p.  142;  L.  1824-5,  pp.  22,  75. 
L.  1834-5,  pp.  204,  214;  L.  1836-7,  p.  50;  L.  Sp.  Sess.  1837,  pp.  17,  102. 

One  per  cent— L.  181 9,  p.  249;  L.  1834-5,  P-  210;  L.  Sp.  Sess.  1837,  pp. 

31,  96. 

One  and  one-half  per  cent — L.  1824-5,  p.  72. 

Two  per  cent— L.  1819,  pp.  48,  259,  305;  L.  1820-21,  p.  160. 

Three  per  cent— L.  1819,  p.  368;  L.  1820-21,  p.  176. 

Four  per  cent— L.  Sp.  Sess.  1837,  p.  94  (Springfield). 

*^L,  1820-21,  p.  39. 

"L.  Sp.  Sess.  1837,  p.  17. 

89C/.  L.  1836-37,  p.  50. 


57]  LEGISLATION,  1809-1838  57 

cation  special  inducements  were  frequently  offered.  Towns 
would  sometimes  submit  to  special  taxation  to  raise  money 
for  donations  to  the  counties.  Thus  in  1837,  Beardstown 
was  given  power  to  collect  a  six  per  cent  tax  on  all  real 
estate  in  the  town  for  the  purpose  of  raising  a  sum  of  ten 
thousand  dollars  to  secure  the  county  seat  of  Cass  County.®" 
The  municipalities  had  other  sources  of  revenue,  such 
as  those  from  special  assessments  and  from  licenses,  but 
undoubtedly  the  major  portion  of  their  income  was  from 
the  taxes  authorized  by  acts  like  those  referred  to  above. 
These  taxes,  although  not  strictly  general  property  taxes, 
were  for  the  most  part  similar  to  them  in  their  nature ;  and 
even,  before  the  end  of  the  period  there  were  a  few  cases  of 
what  might  in  a  strict  sense,  be  called  general  property 
taxes. 

Summary. 

Thus  the  years  between  1809  and  1838  formed  a  period 
of  considerable  legislative  activity.  The  general  system 
carried  over  from  the  Territory  of  Indiana  had  first  to  be 
adjusted  to  the  more  primitive  conditions  existing  in  the 
Territory  of  Illinois;  and  then,  as  the  state  grew,  particu- 
lar problems  had  to  be  met  as  they  arose.  The  property 
subject  to  taxation  changed  very  little,  due,  of  course,  to 
the  fact  that  from  the  beginning  practically  all  property 
was  taxed  and  that  the  forms  of  property  did  not  change 
materially  during  those  years.  Since  the  chief  form  of 
wealth  was  land,  the  land  tax  was  the  backbone  of  the  rev- 
enue system.  What  little  personal  property  was  in  the 
state  was  made  subject  to  taxation,  the  local  communities 
depending  entirely  upon  the  income  from  this  class  of  pro- 
perty during  the  early  years.  The  land  tax  was  shared  by 
the  state  with  the  local  communities  in  varying  proportions, 
after  1819  the  local  communities  taking  a  larger  and  larger 
part  until  they  finally  were  receiving  two- thirds  of  the  rev- 
enue from  the  general  land  tax. 

Compared  with  those  levied 'today,  the  rates  during  this 
period  were  very  low,  although  at  the  end  of  the  period 

^°L.  Sp.  Sess.  1837,  p.  95. 


58  HISTORY  OF  TAXATION  IN  ILLINOIS  [58 

they  were  considerably  higher  than  they  had  been  at  the 
beginning.  Had  they  been  very  higli,  such  assessment 
methods  as  those  used  would  probably  have  been  impossi- 
ble, in  spite  of  the  ease  with  which  the  predominating  type 
of  property  loaned  itself  to  assessment. 

Frequent  changes  were  made  in  the  details  of  assess- 
ment and  collection.  It  is  true  that  the  general  scheme 
of  valuing  lands  by  grouping  them  roughly  into  classes  ac- 
cording to  quality  persisted  throughout  this  period;  but  the 
composition  of  the  groups  was  changed  a  number  of  times. 
The  assessments  were  made  both  with  and  without  the  aid 
of  oath  requirements.  Part  of  the  time  very  heavy  penal- 
ties were  prescribed  for  fraud  in  listing  property  for  tax- 
ation ;  and,  again,  for  a  time  there  were  no  penalties  at  all 
in  such  cases.  Changes  were  also  frequently  made  in  the 
regulation  for  redeeming  property  sold  to  enforce  collec- 
tion. 

The  condition  of  affairs  as  a  whole  during  this  period 
can  best  be  described  by  saying  that,  although  the  principle 
of  the  general  property  tax  was  prescribed  in  the  state  con- 
stitution drawn  up  in  1818,  the  period  was  primarily  one 
of  experimentation.  The  system  was  adjusting  itself;  the 
details  were  not  fixed ;  plans  were  being  tried  out  and  dis- 
carded. Much  of  the  action  was  haphazard;  it  was  mere 
groping.  Fortunately  the  economic  and  fiscal  conditions 
were  such  as  to  make  possible  this  formative  period ;  the  ex- 
periments were  not  too  expensive.  Had  the  responsibilities 
and  strains,  which  came  a  few  years  later,  been  laid  upon 
the  financial  system  at  this  time,  without  the  opportunity 
for  experimental  legislation  and  for  observation  of  tlie 
weak  points  of  the  system  in  vogue,  the  results  could  scarce- 
ly have  been  other  than  disastrous. 


CHAPTER  IV. 

Efficiency  of  the  Tax  System 

Fiscal  Results 

In  the  vault  in  the  office  of  the  state  treasurer  in  the 
capitol  at  Springfield  is  carefully  preserved  a  plain,  wooden 
box,  scarcely  more  than  a  foot  long;  this  box  is  the  recep- 
tacle in  which  the  state  funds  were  kept  during  the  early 
years  of  the  state's  history.  As  it  rests  today,  tucked  away 
on  one  of  the  shelves  in  the  massive  vault  which  has  suc- 
ceeded it,  an  interesting  contrast  is  presented  of  the  im- 
portance of  the  financial  affairs  of  the  state  at  that  time  and 
at  present.  For  the  amounts  involved  in  the  early  financial 
transactions  were  indeed  trifling.  Exact  statistics,  are, 
in  some  cases,  hard  to  obtain.  Thus  the  sums  raised  by 
taxation  for  local  purposes  are  almost  entirely  wanting  for 
the  years  before  1838  ;^  and  it  is  only  after  1820  that  com- 
plete statistics  are  available  for  the  receipts  from  taxation 
for  state  purposes.  However,  some  fragmentary  informa- 
tion exists  concerning  the  total  revenues  of  the  state  from 
all  sources  for  earlier  years.  For  example,  it  is  known 
that  the  total  amount  expended  from  the  state  treasury 

^According  to  the  reports  of  the  state  auditor  and  treasurer,  the  fol- 
lowing amounts  were  transmitted  to  the  counties  as  their  share  in  the  non- 
resident land  tax.  They  were  entitled  to  share  in  this  tax  by  a  law  which 
was  in  force  for  two  years,  1821  to  1823. 

Jan.  I,  1823  to  Nov.  30,  1824. „ $   808.12 

Two  years  ending  Nov.  30,  1826. 1,617.96 

Two  years  ending  Nov.  30,  1828 „ „ 358.13 

From  special  reports  made  by  the  auditor  at  the  request  of  the  legis- 
lature in  183s,  it  appears  that  the  revenue  to  the  counties  from  the  land 
tax  in^  1835  to  $2645149.  (5".  /.,  9  G.  A.,  2  Sess.,  p.  64.)  An  estimate  of 
$31,374-89  is  made  of  the  probable  income  of  the  counties  from  this  source 
in  1836.  These  statistics  do  not  include  the  taxes  which  may  have  been 
levied  on  personal  property  for  county  purposes. 

59 


60  HISTORY  OF  TAXATION  IN  ILLINOIS  [60 

during  the  six  years  that  Illinois  was  organized  as  a  terri- 
tory of  the  second  grade,  December  31,  1812,  to  December 
31,  1818,  was  approximately  twenty  thousand  dollars,  an 
amusingly  small  sum  compared  with  present  day  budgets.^ 
This  figure  represents  fairly  accurately  the  amount  re- 
ceived by  the  territorial  government  from  taxation.  For 
the  territory,  it  will  be  recalled,  had  no  sources  of  revenue 
of  any  consequence  aside  from  the  tax  and  there  was  no 
money  in  the  treasury  at  the  end  of  the  year  1818  when 
the  report  was  made. 

If  the  above  estimate  is  correct  for  the  territorial 
period,  the  amounts  received  from  taxes  in  the  late  years 
of  that  period  were  very  much  larger  than  those  received 
in  the  earlier  years.  For  it  is  known,  from  a  report  made 
to  the  first  territorial  legislature,  that  during  the  one  year, 
from  December  1,  1817  to  December  1,  1818,  the  territorial 
revenue  from  taxation  amounted  to  $9,528.05,^  leaving  only 
about  $10,500  to  be  raised  during  the  other  five  years.* 

The  size  of  the  budgets,  however,  began  to  increase 
sharply  as  soon  as  the  territory  was  admitted  to  the  Union 
in  1818.     During  the  first  two  years  as  a  state,  money  was 


2A  report  to  the  House  of  Representatives  in  1819  puts  the  figure  at 
$20,415.79.  But  the  old  revenue  and  warrant  ledger  in  the  vault  of  the 
state  auditor  at  Springfield  states  that  this  amount  was  only  $19,982.36 
Whatever  may  be  the  explanation  of  this  discrepancy,  the  total  amount 
was  approximately  twenty  thousand  dollars.  H.  J.,  i  G.  A.,  2  Sess.,  p. 
30;  Revenue  and  Warrant  Ledger,  Class  3,  I,  32. 

^H.  J.,  I  G.  A.,  2  Sess.,  p.  30. 

*Reynolds  (My  Oivn  Times,  p.  105)  says  that  the  taxes  imposed  from 
November  i,  181 1  to  November  8,  1814  amounted  to  $4,875.47.  "Of  this 
sum,"  he  says,  "$2,516.89  had  been  paid  into  the  treasury  and  $2,378.47 
remained  in  the  hands  of  the  delinquent  sheriffs  to  be  paid  over."  The 
two  items,  added  together,  do  not  make  the  sum  mentioned  first. 

Moses,  {Illinois,  I,  266)  says  that  the  total  amount  of  revenue  from 
November  i,  1812  to  November  i,  1814  was  $4,875,  of  which  $2,516  was 
collected  and  $2,359  remained  uncollected  in  the  hands  of  the  sheriffs. 
Neither  Reynolds  nor  Moses  gives  exact  references  to  his  sources. 
Moses's  statement  that  the  state  treasurer  received  $1,508  in  1817  and 
$2,471  in  1818  is  at  variance  both  with  the  reports  to  the  assembly  and  with 
the  books  of  the  state  auditor. 


61]  EFFICIENCY  OF  THE  TAX  SYSTEM  61 

paid  out  of  the  treasury  to  the  amount  of  |o2,809.70.' 
There  was  also  a  cash  balance  left  in  the  treasury,  on  Janu- 
ary 1,  1821  of  117,720.13.  This  would  seem  to  indicate 
that  for  two  years  the  entire  receipts  at  the  treasury,  al- 
most all  of  which  probably  came  from  taxation,  were 
170,529.83. 

After  1820  the  regular  reports  of  the  state  auditor 
give  precise  information  concerning  the  receipts  of  the  state 
treasury  from  all  sources,  including  the  various  types  of 
taxation.  The  receipts  from  the  tax  on  property  for  the 
period  are  shown  in  Table  1  :^ 

Table  i.    Receipts  into  the  State  Treasury  from  the  Tax  on  Property, 

1820-1838. 

Jan.  I,  1821,  to  Dec.  27,  1822 $45,803.75 

Jan,  I,  1823,  to  Nov.  30,  1824. 78,942.20 

Two  years  ending  Nov.  30,  1826 93,011.22 

"  "  "      "    1828 90,110.25 

"      "    1830. 73,4+4-88 

"      "    1832 95,001.56 

"      "    1834- 76,863.94 

"      "    1836 84,399.37 

Dec.  3, 1836  to  Nov.  30,  1838 92,365-20 

These  figures  represent  the  state's  share  in  the  receipts 
from  the  tax  on  property.  This  revenue  came  almost  en- 
tirely from  the  land  tax,  the  only  exception  being  in  the 
first  figure  where  a  small  part  of  the  |45,803.75  came  from 
the  tax  on  bank  stock.  All  the  tax  on  other  personal  pro- 
perty went  to  the  counties.  Moreover,  during  the  early 
years,  most  of  the  money  received  by  the  state  came  from 
a  tax  on  the  land  of  non-resident  proprietors ;  for  not  only 
was  the  larger  share  of  the  tax  paying  land  owned  by  per- 
sons living  outside  the  state,  but  after  1823  the  counties 
retained  two-thirds  of  the  revenue  from  the  land  of  resi- 
dents, only  the  remaining  one-third  going  to  the  state.  The 
taxable  land  of  non-residents  consisted  largely  of  claims 

'•Revenue  and  Warrant  Ledger,  Class  3,  I,  32.  This  indicates  that 
the  statement  of  Moses,  (I,  306)  is  inaccurate.  He  says  that  the  receipts 
from  October  18,  1818  to  December  31,  1820  were  $53,362.22  and  the  ex- 
penditures $35,655.00. 

'Compiled  from  the  reports  of  the  auditor  of  public  accounts. 


62  HISTORY  OF  TAXATION  IN  ILLINOIS  [62 

in  the  military  tract  which  had  been  bought  up  by  specu- 
lators from  the  original  grantees.^  Congress  had  appro- 
priated about  three  million  acres  of  this  land  as  bounties 
for  military  service.  As  Governor  Coles  pointed  out  in  a 
letter  to  the  governor  of  Maryland,*  this  policy  had  the 
effect  of  greatly  increasing  the  non-resident  list,  for  much 
government  land  was  made  taxable  which  otherwise  would 
have  remained  exempt  as  property  of  the  United  States.® 
The  temporary  advantage  coming  in  the  way  of  increased 
revenues  from  this  source  was  largely  counterbalanced, 
however,  by  the  fact  that  the  settlement  of  that  part  of  the 
state  where  the  land  was  situated  was  somewhat  retarded 
by  this  form  of  ownership. 

The  sums  received  at  the  state  treasury  from  the  non- 
resident tax  and  the  percentage  which  they  formed  of  the 
total  receipts  from  the  state  tax  on  property  are  shown  in 
Table  2 : 

Table  2.  Receipts  into  the  State  Treasury  from  the  Tax  on  the 
Property  of  Non-Residents  and  the  Percentage  Formed  by  Them 
of  the  Total  Receipts  from  the  Property  Tax,  1820- 1838. 

Percentage 

Jan.   I,   1821,   to  Dec.  22,   1822 $38,437.75  83.9 

Jan.  I,  1823,  to  Nov.  30,  1824. 72,639.48  92. 

Two  years  ending  Nov.  30,  1826 _ 82,569.54  88.8 

"   "  1828. 83,176.28  92.3 

"   "  1830. — 70,396.16  95.8 

"   "  1832 88,218.32  92.9 

"   "  1834- 42,20841  55- 

"   "  1836 8,172.67   •  9-7 

Dec.  3,  1836,  to  Nov.  30,  1838. „ 13,484.69  14.6 

The  most  striking  condition  revealed  in  this  statement 
is  the  rapid  fall  in  the  non-resident  receipts  after  1832. 
Aside  from  the  steady  transfer  of  the  ownership  of  land 
from  non-residents  to  residents,  another  cause  may  be  re- 
sponsible for  this,  namely,  the  hard  times  of  the  thirties, 
which  undoubtedly  bore  heavily  on  many  persons  holding 

'Ford,  Hist,  of  III.  p.  48. 
8/«.  Hist.  Coll..  IV,  45  et  seq. 

•For  conditions  under  which  bounty  lands  became  taxable,  see  supra, 
P-  30. 


63]  EFFICIENCY  OF  THE  TAX   SYSTEM  63 

land  as  a  speculation,  causing  them  to  lapse  in  their  taxes. 
The  item  in  the  auditor's  report  called  receipts  from  "rev- 
enue clerks''  shows  a  large  increase  as  the  receipts  from 
non-residents  diminish.  These  "revenue  clerks"  were  the 
clerks  of  the  countv  commissioners,  to  whom  in  1833  was 
assigned  the  task  of  selling  the  land  of  delinquent  non- 
residents. It  is  probable  that  most  of  the  receipts  from 
"revenue  clerks"  were  sums  realized  from  sales  for  non- 
payment of  taxes.  It  may  be,  however,  that  by  some  ad- 
ministrative order,  unsanctioned  by  formal  legislative 
action,  the  county  clerks  were  made  receivers  of  state  taxes 
on  non-residents'  lands.  The  sums  received  by  the  state 
treasurer  from  the  revenue  clerks  during  this  period  were : 

Two  years  ending  Nov.  30,  1834 — $13,158.72 

"        "  "  "      "    1836. . 45,748.63 

From  Dec.  3,  1836,  to  Nov.  30,  1838 70,015.70 

Table  3  shows  the  ordinary  income  of  the  state  by 
two  year  periods  and  the  percentage  of  these  sums  which 
came  from  the  property  tax.^° 

Table  3.    Total  Oi^dinary  Receipts  into  the  State  Treasury  and  the 
Percentage  Formed  by  the  Receipts  from  the  Property  Tax,  1820-1838. 

Percentage 

Jan.  I,   1821,  to  Dec.  22,    1822 $62,226.70  73.6 

Jan.   I,   1823,  to  Nov.  30,  1824 86,586.93  91.2 

Two  years  ending  Nov.  30,  1826 „..  93,880.07  99.1 

"      "    1828 96,106.94  93  8 

"   "  1830 87,14508     84.3 

"   -■'  "         "      "   1832 106,498.09     89.2 

"   "  1834- 103,534.28     74.3 

"   "  i836..„ 110,310.62     76.S 

Dec.  3,  1836,  to  Nov.  30,  1838. 158,086.78  584 

In  order  to  show  with  what  degree  of  adequacy  the 
revenue  from  taxation  met  the  needs  of  the  state,  it  may 

i^The  figures  in  this  table  do  not  include  the  items  of  "State  paper 
funded  and  interest  on  the  same,"  which  were  receipts  into  the  treasury 
of  securities  taken  up  by  sums  secured  cljiiefly  from  the  "Wiggins  Loan," 
iCf.  supra,  p.  33.)  These  amounts  were,  1830-32,  $105,987;  1832-34,  $3,79o; 
1834-36,  $217.  Moreover,  the  figures  do  not  include  receipts  from  loans. 
The  decreasing  percentage  finds  at  least  a  partial  explanation  in  the  in- 
creased receipts  from  the  school  funds. 


64  HISTORY  OF  TAXATION  IN  ILLINOIS  [64 

be  of  value  to  examine  the  general  condition  of  the  state 
treasury  during  these  years.  Owing  to  the  carelessness 
with  which  the  accounts  were  kept,  it  is  not  possible  to 
give  a  perfectly  balanced  account  of  the  state  finances ;  not 
only  are  there  gaps  between  the  reports,  but  there  are  also 
gross  inaccuracies  in  the  record  of  warrants  drawn  on  the 
treasury,  as  a  result  of  which  the  statements  of  outstanding 
warrants  given  in  the  reports  are  seldom  trustworthy. 
Table  4  presents  the  receipts  and  expenditures  together 
with  the  balances,  as  nearly  as  can  be  ascertained,  against 
or  in  favor  of  the  treasury,  at  the  end  of  each  biennium 
during  the  period. 

Table  4.     Total  Receipts  and  Expenditures  of  the  State  Treasury, 

1818-1838 

Receipts      Expenditures  Balance 

Period  ending  Oct.  i,  1818 $—7,588.00 

Period  ending  Jan.  i,  1821 17,720.13 

Jan.  I,  1821,  to  Dec.  27,  1822........        62,226.70      $  47,145.29  32,801.54a 

Jan.  I,  1823,  to  Nov.  30,  1824 86,586.93          90,79373  29,454.31 

Two  years  ending  Nov.  30,  1826....        93,880.076      156,259.42  —34,015.62 

"        "           "          "      "     1828....        96,106.946      108,090.96  —45,999.64 

"      Dec.     I,  1830....      109,132.266        70,528.48  —  7,395-86 

"        "           "          "      "     1832....      312,885.07^-      329,762.i4(f  —24,272.93 

"        "           "          "      "     1834--      141,627.33        148,083.14  —30,728,74 

"        "           "      Nov.  30,  1836....      248,624.75        163,016.50  54,879-51 

Dec.  3,  1836,  to  Dec.  i,   1838 780,055.92^      824,56488  20,233.77 

(o)  Each  succeeding  treasurer  and  auditor  during  these  early  years 
seems  to  have  assumed  the  right  to  make  his  own  estimate  of  the  amounts 
outstanding  against  the  treasury.  The  figures  in  the  "balance"  column 
must  be  used  with  this  in  mind.  The  discrepancies  of  1824  and  1836  find 
their  explanation  in  this  fact.  A  gap  between  reports  is  responsible  for 
the  discrepancy  of  1822.  The  figures  for  1820-1822  do  not  include  the 
receipt  of  $5,955.82  from  the  United  States  treasury  or  the  expenditure  of 
$150.94,  the  cost  of  transferring  the  sum. 

(b)  Not  including  redemption  fund. 

(c)  Includes  $100,000  from  the  "Wiggins  Loan"  and  $105,986.98  in 
discharged  state  paper. 

(d)  Includes  $215,968.66  in  state  paper  redeemed  and  burned. 

(e)  Includes  $144,049.96  borrowed  from  School  Fund,  but  does  not 
include  the  $335,592.32  appropriated  to  the  School  Fund  and  then  borrowed 
from  it.  It  does  include  the  item  of  $477,919.14,  surplus  revenue,  received 
from  the  United  States  government. 


65]  EFFICIENCY  OF  THE  TAX  SYSTEM  65 

Just  as  the  territory  was  about  to  become  a  state,  Oct- 
ober 1,  1818,  the  auditor  reported  an  unpaid  balance  of 
f  7,588,  showing  that  territorial  revenues  had  not  quite  suf- 
ficed to  pay  expenses."  The  revenues  for  the  following 
two  years  proved  ample  not  only  to  meet  this  deficit  and  the 
current  expenses  of  those  two  years,  but  also  to  leave  a 
favorable  balance  of  $17,720.13.  For  the  next  four  years 
the  finances  of  the  state  remained  in  very  comfortable  con- 
dition. In  1825  and  1826,  however,  the  harmful  effects  of 
the  state  bank  began  to  make  themselves  felt.  Yet  had 
there  been  no  depreciation  in  the  bank  notes,  there  would 
have  been  no  deficit ;  for  the  sums  received  were  nominally 
much  in  excess  of  the  expenses.  Governor  Coles,  in  his  fare- 
well message,  said:  "The  annual  revenue  derived  from  a 
tax  on  land  amounts  to  upwards  of  ^5,000,  while  the  aver- 
age annual  expenditure  of  the  state,  on  the  supposition 
that  there  will  be  no  extra  session  of  the  legislature,  will 
not  exceed  |23,000  in  specie."" 

He  went  so  far  as  to  recommend  a  twenty-five  per  cent 
reduction  in  the  taxes  levied 

under  the  firm  conviction  that  three-fourths  of  our  present  nominal  rev- 
enue will  be  amply  sufficient  to  defray  the  ordinary  expenses  of  govern- 
ment and  leave  an  excess  to  be  annually  increasing  as  well  from  the  ad- 
ditional quantity  of  lands  subject  to  taxation  as  the  appreciation  of  the 
currency,  to  be  applied  to  the  great  and  vital  objects  of  education  and  in- 
ternal improvements.^' 

However,  the  1826  deficit  of  |34,015.62  increased  to 
f45,999.61  by  1828.  At  the  end  of  the  next  two  year  period, 
1830,  it  had  dropped  to  $7,395.86  but  at  this  time,  provision 
being  made  for  the  redemption  of  the  notes  of  the  state 
bank,  the  treasury  was  really  well  along  toward  recovery.^* 
From  1834  until  the  very  end  of  the  period,  the  treasury 
was  not  embarrassed.  In  1834,  according  to  Governor 
Ford,  "The  treasury  of  the  state  for  once  had  become  sol- 

^^H.  J.,  I  G.  A.,  I  Sess.,  p.  35. 

^•S.  J.,  5  G.  A.,  I  Sess.,  p.  24. 

^^Ibid.,  p.  25.  , 

^•*"The  finances  of  the  state  are  fast  emerging  from  that  deranged  and 
depressed  condition  into  which  they  had  fallen  a  few  years  since,  and  are 
now  assuming  a  sound  and  substantial  character."  Governor's  Message, 
December  4,  1832,  5".  /.,  8  G.  A.,  i  Sess.,  p.  12. 


66  HISTORY  OF  TAXATION  IN  ILLINOIS  [66 

vent,  paying  all  demands  in  cash."^^  Governor  Duncan 
in  his  message  of  1836  wrote:  "The  public  revenue  of 
the  state  is  believed  to  be  ample  for  all  the  ordinary 
expenses  of  government."^  ^  However,  the  treasurer's  bal- 
ance sheet  during  the  later  years  of  this  period  was  made 
to  appear  to  much  better  advantage  through  a  somewhat 
questionable  method  by  which  the  money  received  from 
the  United  States  for  schools  was  turned  into  the  Gen- 
eral Revenue  Fund  for  general  expenses.  Instead  of 
levying  taxes  to  secure  revenue  to  meet  appropriations, 
the  legislators,  afraid,  as  some  have  charged,  of  the 
wrath  of  their  constituents,  voted  to  use  for  ordinary  ex- 
penses the  money  in  the  School  Fund,  obtained  from  the 
sale  of  school  lands  and  other  sources.  This  arrangement 
was  technically  designated  a  loan  and  interest  on  the  sum 
borrowed  was  regularly  appropriated  for  the  use  of  the 
schools  of  the  state.  But  the  principal  was  never  repaid 
and  the  appropriations  for  schools,  always  larger  than  the 
interest  on  the  sum,  have  gradually  swallowed  it  up.     In  J 

his  message  to  the  legislature  in  1838  Governor  Duncan 
states  that  the  debt  to  the  School  Fund  amounted  at  that 
time  to  $719,784.61."  This  included  an  item  of  $335,592.32 
which  was  part  of  the  surplus  revenue  received  from  the 
United  States  government,  appropriated  to  the  School  Fund 
and  then  borrowed  to  purchase  bank  stock.  Had  it  not 
been  for  this  extra  source  of  revenue  the  receipts  into  the 
treasury  at  this  partiuclar  time  would  have  been  altogether 
inadequate." 

"Here  we  have  now  no  taxes,  excepting  those  which  are 
raised  on  the  principle  of  our  country  rates,  and  they  are 
scarcely  perceptible,"  gleefully  writes  Morris  Birkbeck  in 
1818  to  his  friends  left  behind  in  England."  But  not 
many  of  Birkbeck's  Illinois  neighbors  had  his  memories  of 
heavy  English  taxes  to  compare  with  the  rates  which  they 

i»Ford,  op.  cit;  p.  169. 

"S".  /.,  10  G.  A.,  I  Sess.,  p.  20. 

^^S.  J.,  II  G.  A.,  I  Sess.,  p.  13;  Peck,  Gazetteer,  p.  65. 

"5".  /.,  II  G.  A.,  I  Sess.,  p.  13. 

^'Letters  from  Illinois  (London,  1818),  p.  41. 


67]  EFFICIENCY  OF  THE  TAX  SYSTEM  67 

were  called  upon  to  pay.  They  compared  them  quite  nat- 
urally with  the  rates  imposed  in  the  states  surrounding 
them ;  and  on  this  basis,  at  least  after  the  admission  of  the 
territory  into  the  Union,  they  found  cause  for  bitter  com- 
plaint in  rates  of  taxation  in  Illinois.  The  situation  was 
so  complicated  by  the  currency  disorders  that  the  true  state 
of  affairs  is  difficult  to  discern.  In  1826,  Governor  Coles 
observed:  "The  rate  of  taxation  is  nominally  higher  in 
Illinois  than  in  the  neighboring  states,  and  if  continued 
will  operate  injuriously  to  the  prosperity  of  the  state." 
As  the  currency  rose  in  value  he  considered  it  proper  that 
the  taxes  should  be  lowered.-"  Nothing  was  done  toward 
lowering  them.  Again  in  1829  Governor  Edwards  men- 
tioned the  oppressive  rates  of  taxation,  pointing  out  that 
the  people  of  the  state  were  "already  taxed  to  an  extent 
unparralled  (sic)  in  any  western  state,  and  precisely  eight 
times  as  high  as  their  brethren  of  an  adjoining  one  (Ken- 
tucky)."-^ The  non-resident  proprietors  of  lands  seemed 
to  feel  that  the  rates  were  very  heavy ,2 ^  and  Governor  Rey- 
nolds in  1831  and  1832  urged  a  reduction  of  the  tax  rate 
on  the  ground  that  it  was  "excessively  high"  and  oppres- 
sive to  the  people."^^ 

The  sale  of  property  for  taxes  is  good  evidence  of  the 
oppressiveness  of  the  burden;  and  the  facts  at  hand  seem 
to  show  that  an  unusually  large  portion  of  taxable  property 
was  sold  under  the  sheriff's  hammer  during  the  later  part 
of  this  period.  If  the  sums  credited  to  "revenue  clerks" 
in  the  auditors'  reports  represent  receipts  from  tax  sales, 

205.  /.,  5  G.  A.,  I  Sess.,  p.  24. 

21///.  Hist.  Coll.,  IV,  148;  Governor's  Message,  5".  /.,  6  G.  A.,  i  Sess., 
n.  p. 

22Govemor  Coles  requested  James  Mason  to  inquire  of  some  of  the 
non-resident  landholders  of  New  York  City  concerning  their  willingness 
to  lend  financial  support  to  the  Illinois  and  Michigan  Canal  project. 
Writing  to  Gov.  Coles  in  1826  concerning  his  conference,  Mr.  Mason  said : 
"I  also  had  a  conference  with  Mr.  Benior  and  Mr.  Munn  who  are  two  of 
the  largest  holders  of  military  bounty  lands  in  the  city,  but  their  reply  was 
that  they  were  very  anxious  to  have  a  danal  made  but  that  they  could  not 
do  more  at  present  than  to  pay  the  high  taxes  we  had  imposed  on  their 
land."  ///.  Hist.  Coll.,  IV,  107. 

235.  J.,  7  G.  A.,  I  Sess.,  p.  62. 


68  HISTORY  OF  TAXATION  IN  ILLINOIS  [6& 

these  sales  were  indeed  very  large.'*  Peck  testified  con- 
cerning the  military  bounty  lands,  that  "many  thousand 
quarter  sections"  were  "sold  by  the  state  for  taxes  and  are 
past  redemption. "23  it  was  reported  in  Niles  Register  that 
as  many  as  seven  thousand  tracts  of  these  bounty  lands 
were  advertised  for  sale  for  taxes  at  one  time.-°  But  high 
as  the  rates  seem  to  have  been,  compared  with  those  of 
states  in  a  like  economic  condition,  and  oppressive  as  they 
were  considered  both  by  the  settlers  and  the  non-resident 
landowners,  efforts  to  reduce  the  rates  were  uniformly 
unsuccessful."' 

If  one  were  to  generalize  concerning  the  success  of 
the  tax  system  during  these  years  from  a  fiscal  point  of 
view  he  would  necessarily  conclude  that  it  accomplished 
measurably  well  the  task  which  was  assigned  to  it.  The 
deficit  left  from  the  territorial  period  was  not  large  and 
until  the  complications  due  to  the  banking  disaster  arose, 
the  condition  of  the  treasury  remained  satisfactory.  It 
must  be  kept  in  mind  that  the  tax  system  was  in  no  way 
responsible  for  the  state  bank.  A  severe  test  of  the  eflS- 
ciency  of  the  system  was  averted  during  the  thirties  by  the 
practice  of  borrowing  from  the  school  funds,  the  aid  from 
these  sources  averting  the  necessity  for  heavier  taxation. 
The  rates,  at  least  after  1820,  seem  to  have  been  higher 
than  those  in  neighboring  states ;  but  it  is  difficult  to  deter- 
mine exactly  how  just  were  the  complaints  so  generally 
made. 

Administrative  Results. 

The  success  from  an  administrative  point  of  view  is 
a  different  story.  The  task  of  assessing  and  collecting  the 
tax  was  not  an  easy  one.  In  the  first  place  the  frontier 
conditions  which  prevailed  were  themselves  sources  of 
many  difficulties.  The  poor  means  of  transportation  meant 
numberless  delays  in  transmitting  money  to  the  state  treas- 

^*Cf.  supra,  p.  63. 

26  Peck,  op.  cit.,  p.  81. 

^^Niles  Register,  XXIX,  165,  Nov.  12,  1825. 

2^C/.  supra,  p.  67. 


69]  EFFICIENCY  OF  THE  TAX  SYSTEM  69 

yj.y  28  rpjjg  frequent  changes  in  county  lines  due  to  the 
sub-division  of  large  counties  into  smaller  ones  were  pro- 
lific causes  of  misunderstanding  as  to  the  duty  of  tax  offi- 
cials.-^ But  perhaps  nothing  was  so  productive  of  admin- 
istrative difficulties  as  the  disordered  condition  of  the  cur- 
rency. Money  was  always  either  scarce  or  bad.  As  Governor 
Edwards  pointed  out  in  his  message  of  1826,  "In  nothing 
can  the  want  of  an  adequate  circulating  medium  be  more 
inconveniently  felt  than  in  the  payment  of  taxes."^°  Even 
the  session  laws  contain  evidence  of  the  troubles  due  to  this 
cause,^^  After  the  establishment  of  the  state  bank  in  1821, 
its  notes  were  receivable  at  the  state  treasury  for  taxes.^' 
The  inequality  in  the  value  of  the  various  kinds  of  money 
in  circulation,  combined  with  the  fact  that  many  unpaid 
auditor's  warrants  were  in  existence  during  almost  the  en- 
tire period,  presented  an  opportunity  to  sheriffs  to  manipu- 
late their  collections  so  as  to  turn  them  into  the  treasury 
in  the  cheapest  acceptable  form.  Sheriffs  took  advantage 
of  this  situation  to  such  an  extent  that  laws  forbidding  the 
practice  were  ^^  passed.  The  frequency  with  which  laws 
were  changed  and  the  carelessness  with  which  they  were 
drawn   formed  further  obstacles  to  efficient  administra- 


-8C/.  L.  1819,  p.  239. 

29C/.  L.  1824-25,  p.  8s. 

"^S.  J.,  5  G.  A.,  I  Sess.,  p.  47. 

3iFor  example,  in  1819  (L.  1819,  p.  300)  the  sheriff  of  Union  County 
was  relieved  of  the  penalty  for  delay  in  paying  in  his  taxes,  owing  to 
the  fact,  as  he  explained,  that  the  description  of  money  required  was 
"scarce  and  very  difficult  to  procure."  At  this  time  the  taxes  had  to  be 
paid  in  money  which  was  receivable  at  the  United  States  land  offices  in 
payment  of  government  land.  Bank  notes  in  circulation  varied  so  widely 
in  short  periods  that  they  sometimes  caused  trouble  to  collectors ;  those 
good  one  month  were  often  bad  the  next.  Thus  relief  was  given  to  a 
sheriff  in  1819  (L.  1819,  p.  235)  because,  although  he  had  collected  the 
taxes  in  lawful  money,  he  found  that  by  the  time  he  came  to  turn  over 
his  taxes  some  of  the  bank  notes  were  no  longer  receivable  at  the  gov- 
ernment land  offices,  and  were  therefore  refused  by  the  state  treasurer. 

32L.  1823,  p.  208;  L.  1827,  p.  335. 

335".  /.,  5  G.  A.,  I  Sess.,  pp.  25,  74 ;  R.  L.  1826-27,  p.  325  et  seq. 


70  HISTORY  OF  TAXATION  IN  ILLINOIS  [70 

tion.^*  OflScials  were  often  uncertain  as  to  exactly  what 
laws  were  in  force. ^' 

From  the  evidence  available,  it  would  seem  that  the 
state  and  local  officials  whose  duty  it  was  to  administer 
the  tax  system  were  remarkable  neither  for  their  ability 
nor  for  their  character.  During  these  years  two  state 
treasurers  were  found  to  be  short  in  their  accounts,  Treas- 
urer Field  having  defaulted,  according  to  a  report  dated 
Nov.  30,  1828,  to  the  amount  of  $19,491.70,  and  Treasurer 
Hall,  on  December  1,  1832,  for  $4,503.72.  Subsequently 
$5,500.06  was  received  from  Field  and  his  securities  and 
$2,922.16  from  the  estate  of  Hall  in  part  payment  of  their 
shortages.^® 

From  the  following  quotation  Governor  Edwards  seems 
to  have  entertained  no  flattering  opinion  of  the  efficienc}'^ 
with  which  the  revenue  system  was  administered :" 

From  the  complexity  of  our  revenue  system,  and  the  confusion  that 
reigns  in  the  accounting  department,  it  is  not  thought  possible,  by  any 
lights  which  the  accounts  of  the  latter  will  afford,  to  ascertain  the  amount 
of  those  (taxes)  that  were  demandable,  even,  for  the  past  year:  Since, 
without  any  effort  to  discover  the  extent  of  that  confusion,  it  has  become 
notorious,  throughout  the  state,  that,  while  many  persons  have  been 
charged  in  the  Auditor's  books  for  lands,  that  did  not  belong  to  them ; 
and  our  own  citizens  with  taxes,  which  either  had  been  previously  paid, 
or  were  payable  to  Sheriffs'  or  County  Collectors,  other  tracts  of  land 
owing  taxes  have  neither  been  charged  by  him,  nor  included  in  the  lists 
he  was  required  to  transmit  to  the  several  counties  in  which  the  taxes  on 
them  were  collectable. 

8*Ford,  op.  cit.,  p.  32. 

^''In  1817,  in  several  of  the  counties  no  tax  was  collected  because  of 
difficulties  which  arose  over  unclear  changes  in  the  law.  L.  181 7- 18,  pp. 
51-52.  In  1821  it  was  discovered  that  no  provision  had  been  made  in  the 
revenue  law  for  the  compensation  of  the  sheriffs  for  collecting  the  taxes 
in  1819  and  1820.  But  this  legislature  contended  itself  with  simply  voting 
the  sheriffs  their  compensation  (L.  1820-21,  pp.  4-6),  and  failed  to  remedy 
the  matter  permanently  by  changing  the  revenue  law.  As  a  result  it  was 
found  presently  that  no  compensation  had  been  allowed  for  the  sheriffs 
in  1821-22  and  further  action  was  necessary.     (L.  1823,  p.  80). 

^'Reports  of  auditor  and  treasurer;  Pr.  L.  1832-33,  p.  123.  More- 
over, the  governors'  letter-books  show  that  Gov.  Edwards  appeared  to 
have  considerable  difficulty  with  the  auditor  in  securing  reports  from  him 
in  regard  to  the  affairs  of  his  office.    ///.  Hist.  Coll.  IV,  p.  118  et  seq. 

"5".  /.,  5  G.  A.,  I  Sess.,  p.  49- 


71]  EFFICIENCY   OF  THE  TAX   SYSTEM  71 

Moreover,  from  the  same  message  of  Governor  Ed- 
wards, ^*  it  is  evident  that  some  of  the  state  officials  had 
been  using  their  positions  to  benefit  from  the  sales  of  land 
for  taxes. 

Evidences  of  corruption  and  inefficiency  among  local 
officials  are  even  more  manifest  in  the  records  than  is  the 
case  with  state  officials.  Early  experience  with  county 
sheriffs  led  to  the  inclusion  in  the  state  constitution  of  the 
following  clause:  "No  sheriff,  nor  collector  of  public 
moneys,  shall  be  eligible  to  any  office  in  the  state,  until  they 
have  paid  over  according  to  law,  all  moneys  which  they  may 
have  collected  by  virtue  of  their  respective  offices."^^  Eec- 
ords  of  several  instances  where  sheriffs  ran  away  with  pub- 
lic money  were  found  in  the  course  of  an  examination  of  the 
session  laws.*" 

Governor  Ford  gives  a  description  of  some  of  the  prac- 
tices of  these  early  sheriffs  which  is  very  illuminating  to 
one  who  seeks  a  view  of  the  administrative  conditions  of 
the  period : 

During  all  this  time,  from  1818  to  1830,  a  very  large  number 
of  sheriffs  elected  by  the  people  were  defaulters  to  the  State  or 
to  counties  for  taxes,  or  to  individuals  for  money  collected  on  execution 
The  practice  was  to  take  the  moneys  collected  on  execution  and  with  them 
to  pay  up  for  taxes,  for  without  getting  certificates  of  all  moneys  charged 
to  them  for  taxes,  the  sheriffs  were  not  allowed  to  be  commissioned  when 
re-elected.  The  people  generally  felt  but  little  interest  in  the  collection  of 
moneys  for  debt,  and  paying  it  over,  so  that  a  defalcation  here  was  not 
apt  to  injure  the  popularity  of  an  officer,  who  would  tend  [probably 
lend]  the  people  money  to  paj^  their  taxes,  and  who  was  compelled  by  his 
official  duty  to  be  constantly  around  among  them,  giving  him  ample  op- 
portunity to  make  friends,  contradict  charges,  and  thus  secure  his 
election.*^ 

^^Ibid.  p.  74. 

39/?.  L.  1833,  P-  47-  Cf.  L.  1819,  p.  109  and  R.  L.  1826-27,  p.  374.  The 
letters  of  the  governors  show  that  a  provision  of  this  sort  was  needed  and 
that  an  earnest  attempt  was  made  to  enforce  it.    ///.  Hist.  Coll.,  IV.,  p.  15. 

*°Those  who  had  acted  as  securities  for  the  sheriff  of  Gallatin  County 
in  1824-25  were  forced  to  make  good  short-comings  of  that  official.  Pr. 
L.  1832-33,  p.  120.  A  law  passed  in  1821  makes  it  evident  that  the  sheriflf 
of  Jefferson  County  had  absconded  (L.  1820-21,  p.  29),  the  act  making  pro- 
vision for  the  election  of  his  successor. 

*iFord,  op:  cit.,  p.  82.  A  law  passed  in  1827,  (R.  L.  1826-27,  p.  372), 
contains  a  provision  which  permits  those  who  have  advanced  money  for 


72  HISTORY  OF  TAXATION  IN  ILLINOIS  [72 

In  view  of  all  these  difficulties  it  is  not  surprising  that 
the  administrative  machinery  should  run  with  a  great  deal 
of  friction.  The  session  laws  of  every  legislature  are  full 
of  evidence  that  such  was  the  case.  Taxes  were  not  col- 
lected on  time ;  tax  officials  were  not  appointed  at  the  times 
required  by  law;  assessments  were  made  too  early  or  too 
late.  Indeed,  the  machinery  seems  to  have  been  stalled  at 
one  time  or  another  in  about  every  place  where  trouble 
could  have  occurred. 

Even  as  early  as  1809,  when  Illinois  was  first  organ- 
ized as  a  territory,  there  were  already  irregularities  in  the 
tax  collections.  It  appears  from  a  law  passed  in  that  year 
that  the  former  sherifif  of  Randolph  County  had  "neglected 
to  collect  all  the  county  levies."^^  He  was  given  six  months 
to  collect  what  was  due  him.  In  this  same  year  it  was 
necessary  to  allow  extra  time  for  assessment  purposes  in 
Randolph  County.^ ^ 

Striking  evidence  of  the  inefficiency  of  the  administra- 
tion is  furnished  by  the  high  percentage  of  the  taxes  which 
were  never  collected.  The  extracts  from  Moses  and  Rey- 
nolds, quoted  in  the  note  on  page  60,  agree  that  almost  half 
of  the  taxes  due  were  not  collected  in  the  early  years  of  the 
territorial  period.  In  1813,  in  two  counties,  the  assessors 
were  not  appointed  until  after  the  time  when  the  returns 
of  the  assessment  lists  should  have  been  made.  In  one 
county  no  assessors  were  appointed  at  all,  and  in  another 
county,  for  no  assigned  reason,  the  assessment  was  not 
made.*^  Laws  passed  in  1816  extended  the  time  for  the 
collection  of  the  taxes  in  two  counties,  because  of  tardiness 
on  the  part  of  the  assessors  in  preparing  the  tax  list,  an^ 
the  time  was  extended  in  one  county  because  the  tax  list 
had  been  refused  by  the  commissioner's  court  on  the  ground 
that  it  had  been  made  out  prior  to  the  time  specified  by 

any  tax  payer  to  make  collections  after  the  expiration  of  their  terms  of 
office.  Thus  at  least  part  of  the  practice  which  Ford  describes  was  recog- 
nized by  the  legislature. 

«2L.  Terr.  ///.,  p.  5. 

*^Ibid.,  p.  II. 

**Act  Approved  Dec.  i,  1813.  Manuscript  in  office  of  secretary  of 
state. 


73]  EFFICIENCY  OF  THE  TAX  SYSTEM  73 

law.*^  In  1819  it  developed  that  in  one  county  no  taxes 
had  been  collected  for  the  preceding  three  years.^®  In 
another  county  the  taxes  for  1818  remained  uncollected^^, 
on  account  of  the  neglect  of  the  county  court  to  levy  the 
taxes  in  accordance  with  the  provisions  of  the  law.^^  In 
1821,  in  1823,  and  indeed  at  practically  every  session  there- 
after, it  was  necessary  to  pass  acts  extending  the  time  limit 
for  paying  over  the  taxes.^®  As  late  as  1835  the  taxes  for 
1833  had  not  been  collected  in  Fulton  county,  and  those  for 
1829  had  not  been  collected  in  St.  Clair  county .^^  Irregu- 
larities in  assessment  are  also  apparent  from  numerous 
laws.^^ 

Thus  it  appears  that  it  was  in  spite  of  crudely  drawn 
statutes  and  loose  administrative  methods  that  the  general 
property  tax  in  Illinois  reached  the  degree  of  financial  suc- 
cess which  it  attained.  The  chief  explanation  of  its  measure 
of  success  is  to  be  found  in  the  simplicity  of  the  economic 
situation.  Practically  all  the  property  worth  taxing  was 
tangible,  and  unconcealable.  Part  of  the  explanation  is 
doubtless  the  lightness  of  the  tax ;  for  in  spite  of  the  com- 
plaints of  contemporaries  the  rates  were  quite  low,  com- 
pared with  present-day  standards.  Certainly  the  examina- 
tion of  this  early  period  reveals  little  that  would  be  of 
comfort  to  those  who  feel  that  the  general  property  tax 
was  until  very  recently  an  unqualified  success.  Even  when 
the  great  modern  problem  of  intangible  property  was  not 
present  to  complicate  the  situation,  the  early  history  of 
Illinois  furnishes  no  picture  of  a  general  property  tax 
operating  efficiently  and  economically.  Even  under  simple 
conditions,  the  tax  system  was  far  from  ideal. 

*5L.  1815-16,  pp.  21,  30. 

<8L.  1819,  pp.  168,  266. 
*''Ibid.,  p.  164. 

*^S.  J.,  I  G.  A.,  2  Sess.,  p.  25.  ,^ 

*^L.  1820-21,  p.  19;  L.  1824-25,  p.  172;  L.  1826,  p.  58;  R.  L.  1826-27,  p. 
338;  L.  1834-35,  p.  72;  L.  1836-37,  p.  323- 
6»L.  1834-35,  pp.  38,  60. 
"L.  1824-25,  p.  So;  R.  L.  1826-27,  p.  338. 


C.     THE  DEBT-PAYMENT  PERIOD,  1839-1872. 

CHAPTER  V 

Taxation  for  Debt  Payment^  1839-1848 

The  State  Debt  and  the  Tax  Problem. 

The  key  to  the  development  of  taxation  in  Illinois  dur- 
ing the  middle  decades  of  the  century  is  the  state  debt. 
The  story  of  the  creation  of  this  debt  and  of  the  struggle  of 
the  state  to  rid  itself  of  it  is  as  interesting  as  it  is  impor- 
tant. During  the  late  thirties,  the  years  of  debt  formation, 
the  course  of  events  moved  with  startling  rapidity.  A 
commonwealth  which  in  1835  was  young  and  poor  but 
nevertheless  respectable,  suddenly  developed  an  imagina- 
tion, a  daring  and  a  recklessness  in  spending  borrowed 
money  which  in  a  few  years  worked  its  almost  complete 
ruin.  In  1842,  Illinois  was  a  discredited  state.  Every 
project  which  she  had  undertaken  had  gone  to  pieces.  An 
enormous  load  of  interest-bearing  indebtedness  remained 
as  almost  the  sole  evidence  of  the  millions  she  had 
squandered. 

The  action  during  the  years  following  does  not  move 
so  rapidly;  they  were  the  years  of  debt  payment — ^years 
when  every  dollar  which  came  to  the  state  treasury  found 
not  one  but  a  thousand  claims  crying  for  settlement.  The 
young  state  had  lived  beyond  her  means ;  her  debts  greatly 
exceeded  her  assets.  It  was  a  serious  question  whether 
even  at  a  more  mature  age  she  would  develop  enough  eco- 
nomic strength  to  pay  her  obligations;  some  thought  not. 
How  far  her  growing  strength  might  be  levied  upon  by 
taxation  was  the  vital  question  which  had  to  be  answered. 
During  the  trying  years  of  the  forties  the  solution  was 

74 


75]  TAXATION  FOR  DEBT  PAYMENT^   1839-1848  75 

worked  out.  The  burden  which  appeared  overwhelming  to 
the  state  at  twenty-three  years  of  age  seemed  not  unreason- 
able during  the  late  fifties  and  became  a  mere  trifle  toward 
the  end  of  the  period. 

The  financial  troubles  of  Illinois  were  due  to  banking 
and  internal  improvement  schemes.  The  actual  loss  due 
to  the  banking  ventures  was  inconsiderable  compared  with 
that  attributable  to  internal  improvements.  This  was  not 
because  the  banking  investment  was  a  wise  one,  but  rather 
because  the  state  was  fortunate  in  the  settlement  with  the 
banks.  Of  the  internal  improvement  schemes,  the  Illinois 
and  Michigan  Canal,  although  a  great  financial  problem 
for  a  time,  finally  worked  out  its  own  salvation.  Thus  the 
great  "Scheme  of  Internal  Improvements"  must  be  held 
responsible  for  the  bulk  of  the  debt. 

Because  of  the  incompleteness  of  the  records  and  other 
reasons,  the  estimates  of  the  state  debt  given  in  various 
places  vary  to  an  astonishing  degree.  In  the  following 
statement  an  attempt  is  made  to  summarize  the  verifiable 
facts  as  to  the  extent  of  the  indebtedness  in  the  early  for- 
ties before  the  resumption  of  interest  payments.^ 

(1)  The  banking  liabilities  of  the  state  before  the 
settlement  were  (a)  f 2,665,000  in  state  bonds  issued  to  the 
bank  for  stock,  some  of  which  were  sold  on  the  market  and 
some  not;  (b)  |335,592.32,  borrowed  from  the  School  Fund 
and  paid  on  bank  stock;  (c)  losses  through  depreciated 
bank  paper  received  for  taxes  after  the  banks  had  sus- 
pended specie  payments — losses  which  cannot  be  accurately 
estimated;  and  (d)  a  possible  claim  for  $100,000  paid  for 
state  bank  stock,  depending  on  the  source  from  which  the 
money  came.  A  minimum  estimate  would  be  $2,665,000, 
not  considering  the  money  borrowed  from  the  School  Fund 
a  debt  and  disregarding  all  paper  money  losses.    A  maxi- 


^Lack  of  space  makes  it  impossible  to  give  in  this  place  a  full  state- 
ment of  the  creation  of  the  state  debt  and  of  the  basis  on  which  the 
estimate  given  here  is  based.  If  present  plans  carry,  the  data  will  be 
published  soon  in  separate  form. 


IQ  HISTORY  OF  TAXATION  IN  ILLINOIS  [76 

mum  which  would  cover  all  possible  liabilities  on  account 
of  the  banks  would  be  $3,300,000. 

(2)  The  canal  liabilities  were  (a)  bonded  indebted- 
ness estimated  in  reports  when  the  trustees  took  charge  at 
15,383,000,  including  the  Wright  and  Company  bonds  and 
therefore  rightfully  subject  to  a  reduction  of  $722,000;  (b) 
miscellaneous  indebtedness,  including  scrip,  orders  on  the 
commissioners  etc.,  to  the  amount  of  $1,084,449;  (c)  inter- 
est charges  amounting  to  about  a  half-million  dollars  in 
1842;  (d)  claims  for  damages  to  the  extent  of  at  least 
$230,000;  and  (e)  a  share  of  the  bonds  lost  through  hy- 
pothecation for  interest  prior  to  January  1,  1842,  either 
$150,000  or  $400,000,  according  as  the  sum  actually  lost 
or  that  of  outstanding  securities  is  taken  as  the  basis  of 
estimate.  Therefore  $6,625,449  would  be  a  very  conserva- 
tive estimate  and  $8,000,000  a  liberal  one. 

(3)  The  liabilities  on  account  of  the  General  System 
of  Internal  Improvements  consisted  of  (a)  the  bonded 
debt,  $5,085,444  in  1842,  but  properly  subject  to  a  million 
dollar  reduction  because  of  the  Wright  and  Company 
bonds;  (b)  scrip  issued  in  1840  and  1841,  $1,424,585 ;2  (c) 
interest  due  January  1,  1842,  approximately  $250,000;  (d) 
a  share  of  the  bonds  hypothecated  for  interest  (see  2  e 
above),  $150,000  to  $400,000.  A  minimum  of  about  $5,- 
909,829  is  thus  arrived  at;  $7,500,000  may  be  taken  as  a 
maximum. 

(4)  The  bonds  issued  to  build  the  state  house 
amounted  to  $128,000. 

(5)  Unpaid  auditor's  warrants  and  overdrafts  on 
December  1,  1842,  amounted  to  $272,094.43. 

(6)  As  a  part  of  a  maximum  estimate  of  the  state's 
liability  the  $477,919.14  surplus  revenue  received  from  the 
federal  government  might  be  included. 

(7)  The  borrowings  from  the  school  funds  might,  like- 
wise, be  included  in  the  maximum.  In  1842  these 
amounted  to  $808,084.18. 

^Reports,  22  General  Assembly,  1861,  p.  414. 


77]  TAXATION   FOR  DEBT  PAYMENT,   1839-1848  77 

The  estimates  then  stand  as  shown  in  Table  5. 

Table  5. 

Estimates  of  the  State  Debt  at  the  Time  of  the  Suspension 

OF  Specie  Payments. 

Minimum.  Maximum, 

(i)    Banks  $2,665,000  $3,300,000 

(2)  Canal   6,625,000  8,000,000 

(3)  Internal   Improvements 5,909,829  7,500,000 

(4)  State    House 128,000  128,000 

(5)  Unpaid  Warrants  and  Overdrafts       272,094  272,094 

(6)  Surplus    Revenue 477.919 

(7)  School    Funds 808,084 

:•         Totals    $15,599,923  $20,486,097 

Thus  the  state  debt  was  somewhere  between  fifteen 
and  a  half  and  twenty  and  a  half  millions ;  in  the  opinion 
of  the  writer,  probably  nearer  the  second  than  the  first 
figure. 

The  magnitude  of  the  financial  problem  of  Illinois  in 
the  early  forties  is  diflQcult  to  comprehend.  It  is  only 
when  one  reads  the  contemporary  documents — the  reports 
of  the  state  officials,  the  messages  of  the  governors,  the 
reports  of  the  legislative  committees  and  the  frantic  press 
letters  of  the  citizens  and  investors — that  the  gravity  of 
the  situation  is  understood.  A  considerable  part  of  the 
total  liability  of  the  state  was  cancelled  by  means  of  favor- 
able settlements  with  the  banks  and  with  the  canal  inter- 
ests. A  few  additional  assets  of  varying  degrees  of  worth- 
lessness  were  available;  but  after  the  fluster  was  over  and 
the  dust  had  settled,  the  people  had  to  face  the  necessity 
of  raising  large  sums  of  money  year  after  year  by  disagree- 
able methods  of  taxation.^    The  means  by  which  the  state 

^Such  resources  included  "two  mill  seats  en  the  Wabash  River;  fifty- 
five  miles  of  finished  railroad ;  various  commencements  of  other  rail- 
roads ;  railroad  iron ;"  lands  acquired  in  connection  with  the  internal  im- 
provement enterprises  (42,291.65  acres)  ;  lands  selected  under  the  act  of 
Congress  of  September  4,  1841  (209,060.05  acres)  ;  and  sums  of  money 
due  the  state  ($730,500).  Senate  Journal,  13  G.  A.,  i  Sess.,  pp.  12,  37; 
Auditor's  Report,  1850,  p.  20.  The  fifty-five  miles  of  railroad  referred 
to  extended   from  Springfield  to  the  Illinois  River,  and  had  cost  about 


78  HISTORY  OF  TAXATION  IN  ILLINOIS  [78 

taxed  itself  back  to  financial  respectability  are  now  to  be 
reviewed. 

It  will  be  recalled  that  the  primitive  form  of  the 
general  property  tax  persisted  until  the  late  thirties,  land 
being  valued  by  classification  into  rough  groups,^  and  the 
state  sharing  the  proceeds  with  the  counties.  Under  the 
arrangement  in  force  in  1838,  the  state  received  all  the 
taxes  on  the  land  belonging  to  non-residents.  It  will  also 
be  remembered  that,  during  the  late  years  of  the  early 
period,  the  solvency  of  the  treasury  was  preserved  by 
generous  borrowings  from  trust  funds.  Under  the  system 
in  force  the  state's  share  in  the  tax  revenues  grew  propor- 
tionately smaller,  for  the  land  was  passing  more  and  more 
into  the  hands  of  residents;  and  yet  the  need  for  revenue 
was  rapidly  increasing.  The  School  Fund  could  not  con- 
tinue indefinitely  to  play  the  role  of  the  fairy  godmother 
and  the  necessity  presented  itself  of  reforming  the  tax 
system  so  as  to  bring  more  revenue  into  the  state  treasury.' 

Tax  Law  of  1839. 

The  tax  system  established  in  1839  was  in  force  when 
the  exaggerated  financial  plans  of  the  legislators  tumbled 
down  about  their  ears  in  the  early  forties.  It  must  be 
remembered  that  it  was  not  planned  to  meet  extraordinary 
demands  for  revenue.  At  most  it  was  to  provide  for  cur- 
rent expenses.  The  internal  improvement  schemes  and  the 
banks  were  expected  not  only  to  take  care  of  themselves  but 
also  to  bring  in  a  profit  which  would  perhaps  make  taxa- 
tion entirely  unnecessary.  Instead  of  this  happy  result, 
the  tax  system  had  to  be  relied  upon  during  this  period  to 
bear  the  entire  burden.  Revamped  somewhat  it  was  called 
upon  to  meet  the  ordinary  expenses  of  a  rapidly  developing 
commonwealth,  and,  in  addition,  to  pay  off  a  staggering 
debt. 

one  million  dollars.  In  1846  the  governor  recommended  that  it  be  offered 
for  what  the  iron  would  bring.  Senate  Reports,  15  G.  A.,  i  Sess.,  p  133; 
Ford,  History  of  Illinois,  p.  189. 

*  Supra,  pp.  41,  43. 

•S".  /.,  II  G.  A.,  I  Sess.,  p.  13. 


79]  TAXATION  FOR  DEBT  PAYMENT^   1839-1848  79 

The  state  auditor  seems  to  have  been  the  first  oflftcial 
to  point  out  that  the  land  was  getting  into  the  hands  of 
residents  and  that  a  change  in  the  law  was  therefore  neces- 
sary.   "The  period  has  arrived,"  he  declared  in  December, 

1838,  "when  an  amendment  to  our  revenue  laws  can  be  no 
longer  postponed."*'  The  governor  in  his  message  sug- 
gested a  change  in  the  rates,  which  he  thought  need  not  be 
great  since  the  amount  of  taxable  land  was  "rapidly  in- 
creasing,"^ But,  contended  the  auditor,  the  decrease  of 
revenue  from  the  non-resident  tax  would  "counterbalance 
any  accession"  from  lands  becoming  taxable  for  the  first 
time. 

However,   the  law  which   was  passed   in   February, 

1839,  went  far  beyond  a  mere  change  in  the  rates.  It 
swept  away  entirely  the  old  system  of  rough  classification 
as  a  means  of  valuing  lands  for  taxation  and  specified  that 
both  land  and  personal  property  should  "be  valued  accord- 
ing to  the  true  value  thereof,"  It  broadened  the  definition 
of  taxable  property  and  narrowed  the  exemptions.  It 
abandoned  all  distinctions  between  property  taxable  for 
local  purposes  and  property  taxable  for  state  purposes, 
making  the  state  and  county  rates  apply  to  the  same  base. 
Specifically,  the  law  declares  that 

all  lands,  tenements,  and  hereditaments,  situated  in  this  state,  claimed  by 
individuals,  or  bodies  politic  or  corporate,  except  such  lands  as  may  be 
owned  by  societies  or  corporations  for  the  purpose  of  burying  ground, 
church  grounds,  and  grounds  for  the  use  of  literary  institutions,  not  to 
exceed  ten  acres,  whether  by  deed,  entry,  patent,  grant,  bond  for  con- 
veyance, or  otherwise,  except  lands  belonging  to  the  United  States,  or  this 
state,  and  such  other  lands  as  are  exempted  from  taxation  by  the  terms 
of  the  compact  between  this  state  and  the  United  States,  are  hereby 
declared  subject  to  taxation;  also  the  following  personal  property,  viz: 
stud  horses,  asses,  jinnies,  mules,  horses,  mares,  cattle,  slaves,  and 
servants  of  color,  clocks,  watches,  carriages,  wagons,  carts,  money  actually 
loaned,  stock  in  trade,  and  all  other  description  of  personal  property,  of 
the  stock  of  incorporated  companies;  and  so  that  every  person  shall  pay 
a  tax  in  proportion  to  the  value  of  the  property  he  or  she  has  in  his  or 
her  possession,  the  aforesaid  property  declared  subject  to  taxation  shall 
be  valued  according  to  the  true  value  lihereof,  as  hereinafter  directed.^ 

85.  /.,  II  G.  A.,  I  Sess.,  p.  52. 

''Ibid.,  p.  13. 

8L.  1838-39,  p.  3  et  seq. 


80  HISTORY  OF  TAXATION  IN  ILLINOIS  [80 

It  scarcely  needs  to  be  pointed  out  that  in  this  law 
is  found,  at  last,  almost  the  purest  type  of  the  general 
properly  tax.  It  may  be  objected  that  instead  of  stating 
baldly  that  all  property  should  be  subject  to  taxation,  the 
law  specifies  particular  articles.  But  it  will  be  noticed  that 
included  in  the  list  of  taxable  articles  is  a  comprehensive 
item  taxing  "all  other  description  of  personal  property." 
Certainly  this  law  makes  something  of  a  shift  in  the  point 
of  view;  the  tax  is  less  a  tax  "on  the  thing"  and  more  a 
tax  "on  the  person." 

One  of  the  new  items  specified  in  the  list  of  taxable 
property  is  that  of  "money  actually  loaned,"  the  first  in- 
stance of  the  taxation  of  credits  in  Illinois.  No  arrange- 
ment is  supplied  for  deducting  debts. 

By  making  a  departure  from  the  older  system  of  des- 
ignating certain  types  of  property  as  taxable  for  state 
purposes  and  certain  other  types  for  local  purposes,  an 
element  of  elasticity  was  introduced  into  the  situation. 
Now  the  state  could  increase  or  decrease  its,  revenue  by  the 
simple  process  of  varying  a  single  rate  which  would  be 
extended  on  all  property.  Before,  it  was  necessary  to  effect 
a  general  readjustment  between  local  and  state  rates,  or 
to  redistribute  taxable  property  between  the  localities  and 
the  state.  The  state  rate  was  fixed  in  1839  at  twenty  cents 
on  each  one  hundred  dollars  of  taxable  property.  For 
counties  a  maximum  of  fifty  cents  (one-half  of  one  per 
cent)  was  established. 

The  change  instituted  in  the  basis  of  assessment  by 
this  same  law  makes  very  difficult  any  comparison  of  the 
new  rates  with  those  in  force  before.  This  much  of  a  com- 
parison is  possible,  however.  Assuming  that  the  land 
rated  first  class  under  the  old  arrangement  had  a  fair  cash 
value  of  four  dollars  per  acre — the  sum  set  in  the  early  law 
to  be  the  value  of  such  first  class  land — the  taxes  under  tlie 
old  arrangement  amounted  to  two  dollars  for  one  hundred 
acres,  compared  with  a  maximum  of  |2.80  under  the  new 
(county  taxes,  two  dollars;  state  tax,  eighty  cents).  The 
adoption  of  the  new  law  resulted  in  an  immediate  aug- 


81]  TAXATION  FOR  DEBT  PAYMENT,   1839-1848  81 

mentation  of  the  state  revenues.  The  receipts  from  the 
property  tax  in  1836-38  were  approximately  |90,000;  for 
the  next  biennium  they  amounted  to  over  $125,000. 

A  few  of  the  administrative  features  of  the  new  law 
are  also  of  interest.  The  tax  officials,  both  assessors  and 
collectors,  were  appointed  by  the  county  commissioners' 
courts.*  The  assessor  was  to  be  furnished  annually  with 
lists  of  lands  ;^°  he  was  then  to  call  upon  each  property 
owner,  value  his  land,  and  assess  his  personal  property. 
He  was  authorized  to  require  any  person  to  swear  to  make 
"true  and  distinct  answers"  to  all  questions.  If  the  person 
was  not  at  home,  the  assessor  made  an  estimate  which  stood 
unless  complaint  was  made.  Refusal  to  list  rendered  the 
person  liable  to  an  arbitrary  assessment  and  a  fifty  dollar 
fine.  In  case  of  dissatisfaction,  an  appeal  could  be  made 
to  the  county  commissioner's  court;  no  other  review  or 
equalization  was  provided.  Collections  were  to  be  made 
by  means  of  personal  calls  at  the  residences  of  property 
owners.  Personal  property  was  first  to  be  seized  for  unpaid 
taxes,  then  real  estate.  The  tax  deed  was  to  be  given  to 
the  person  offering  to  exact  as  penalty  the  least  number  of 
acres  irom  the  east  side  of  the  tract  of  land  in  question. 
The  redemption  period  remained  unchanged ;  land  could  be 
reclaimed  within  two  years  upon  payment  of  double  the* 
amount  for  which  the  tract  was  sold  plus  subsequent  taxes 
with  interest.^  ^  This  period  was  more  extended  in  the 
case  of  minor  heirs;  it  was  indefinite  when  the  land  had 
been  forfeited  to  the  state.  Except  for  assistance  from  the 
auditor  in  making  up  the  land  lists,  there  was  no  super- 
vision or  cooperation  with  the  state  authorities. 

In  the  law  of  1839  the  property  owners  of  the  state 
encountered  something  different  from    what    they    were 

^Ibid.,  p.  3  et  seq.  The  number  of  assessors  might  be  one  or  more, 
according  to  the  original  law.  An  amendment  passed  in  1841  restricted 
the  number  to  one.    L.  1840-41,  p.  34. 

^°An  amendment  passed  in  1839,  directed  the  assessor  to  add  lands 
which  he  might  discover  to  be  missing.    L.  1839-40,  p.  4. 

^^Six  per  cent  by  the  original  law ;  ten  per  cent  in  township  counties  by 
an  amendment.    L.  1853,  p.  81. 


82  HISTORY  OF  TAXATION  IN  ILLINOIS  [82 

accustomed  to  in  the  earlier  laws.  The  county  taxation  of 
personal  property  under  the  system  in  force  prior  to  this 
time  must  have  been  extremely  insignificant,  for  the  at- 
tempt to  put  the  new  law  into  effect  aroused  a  storm  of 
protest.  Both  the  auditor  and  the  governor  remark  about 
the  hostility  to  the  law.^-  Complaint  was  made  particu- 
larly about  the  "details"  of  the  law,  probably  referring  to 
personal  visits  of  the  assessor  to  value  property.  The  rate 
of  taxation  was  also  the  cause  of  dissatisfaction.  So  strong 
was  the  feeling  that  "some  of  the  counties  .  .  .  resisted 
it  by  a  refusal  to  list  their  taxable  property"!  The  gov- 
ernor pointed  out  the  absurdity  of  such  an  attitude;  he 
expressed  his  approval  of  the  principle  of  the  law,  viz.^ 
"that  each  person  should  pay  a  tax  in  proportion  to  the 
value  of  his  property" ;  describing  some  of  the  "details"  as 
"justly  .  .  .  objectionable,"  he  recommended  their  modifi- 
cation; and,  finally,  he  pointed  out  the  impossibility  of 
reducing  taxes,  "the  present  revenue  not  being  sufficient  to 
defray  the  ordinary  expenses  of  the  State  Government." 
Indeed  at  this  very  time  a  joint  committee  of  the  two 
houses  of  the  legislature  was  considering  the  question  of 
raising  still  greater  sums  by  taxation.  Interest  payments 
on  the  state  debt  were  becoming  a  very  serious  problem.^ ^ 
The  committee  declared  it  to  be  a  "certainty  that  we  must 
ultimately  resort  to  direct  taxation  to  meet  our  liabilities" ; 
but  additional  taxation  was  not  a  possibility  at  that  par- 
ticular time  because  the  people  were  "not  in  a  condition  to 
bear  it."^*  The  legislature  responded  with  a  few  slight 
administrative  amendments,  for  the  most  part  changes  in 
dates  and  fees.^** 

About  this  time  work  was  abandoned  on  the  internal 
improvement  scheme  and  the  struggle  to  raise  money  to 
meet  interest  payments  reached  an  acute  point.^® 

^^Aud.  Kept.,  1839,  p.  12;  Message  of  Governor  Carlin,  Dec.  10,  1839, 
Senate  and  House  Reports,  11  G.  A.,  2  Sess.,  p.  10. 

^^$592,800  was  the  amount  annually  accruing  at  this  time.  Aud.  Rept., 
1839,  p.  14.  • 

"5".  /.,  II  G.  A.,  2  Sess.,  p.  145. 

"L.  1839-40,  p.  3. 

^'Ibi^.,  p.  93, 


83]  TAXATION   FOR   DEBT  PAYMENT^    1839-1848  83 

The  First  Interest  (Tax. 

The  legislature  which  met  late  in  1840  authorized  the 
hypothecation  of  state  bonds  to  pay  interest — an  act  which 
greatly  irritated  the  citizens  of  the  state.^^  Governor 
Carlin  realized  that  the  course  adopted  was  a  suicidal  one 
and  "ere  long  must  be  abandoned.^ ^  It  ought  not  to  be 
concealed  that  if  the  vast  debt  which  has  been  incurred  on 
account  of  our  internal  improvements  is  ever  to  be  paid, 
it  must  be  done  through  the  medium  of  taxation."  Know- 
ing that  the  weight  of  the  tax  burden  already  imposed 
precluded  any  increase  in  the  tax  rate,  he  made  the  clever 
proposal  that  the  state  increase  its  revenues  at  the  expense 
of  the  counties.  His  suggestion  was  that  the  county  maxi- 
mum rate  be  reduced  from  fifty  cents  to  twenty  cents  per 
one  hundred  dollars  of  valuation  and  the  state  rate  be 
increased  from  twenty  to  twenty-five  cents.  By  this  plan 
the  total  tax  rate  "would  be  reduced  instead  of  increased 
and  the  counties  would  still,  with  proper  economy,  be  sup- 
plied with  means  to  meet  all  necessary  expenditures." 

But  the  governor's  suggestion  did  not  appear  judicious 
to  the  legislature.  The  course  adopted  included  a  fifty  per 
cent  increase  of  the  state  rate,  making  it  thirty  cents,  but 
involved  no  deduction  in  the  county  rate.^^  The  revenue 
from  the  additional  rate  was  to  "be  set  apart  exclusively 
for  the  payment  of  interest  on  state  indebtedness."  This 
act  included  another  noteworthy  provision,  w^hose  signifi- 
cance may  be  variously  construed.  It  provided  that  the 
minimum  valuation  of  lands  for  taxation  should  be  three 
dollars  per  acre  and  that  each  assessor  should  be  required 
to  swear  "particularly"  that  he  would  "in  no  instance  value 
any  land  at  three  dollars  an  acre,  that  he,  in  his  conscience, 
believes  to  be  worth  more."  Of  course  this  clause  may  be 
merely  an  attempt  to  get  more  revenue  from  low  class  land 
than  was  exactly  just  under  the  general  principle  of  the 
system  in  force.  But  the  much  more  probable  explanation 
is  that  the  legislators  were  very  much  alive  to  the  fact  that 

^''Niles'  Register,  LXI,  242  et  seq. 
^^Repts.,  12  G.  A.,  I  Sess.,  p.  8. 

^^L.  1840-41,  p.  165.    Minor  changes  in  the  administration  of  the  sys- 
tem were  made  by  an  act  passed  in  February,  1841.    Ibid.,  p.  34. 


84  HISTORY  OF  TAXATION  IN  ILLINOIS  [84 

evils  of  undervaluation  were  in  existence  even  during  these 
early  years.  ^*^ 

Although  the  necessity  for  heavy  taxes  was  clearly 
apparent,  the  difficulty  of  imposing  them  was  equally  evi- 
dent. Governor  Carlin,  upon  giving  up  his  office  late  in 
1842,  included  this  paragraph  in  his  parting  message  to 
the  legislature: 

To  increase  the  rate  [of  taxation]  at  the  present  time  would  be  to 
inflict  general  embarrassment  and  distress,  and  to  impose  upon  the  people 
a  burden  which  they  could  not  possibly  endure.  Therefore  I  am  forced 
to  the  unpleasant  and  humiliating  conviction,  that  you  cannot  from  this 
source  [taxation],  or  any  other  at  your  command,  make  any  permanent 
provision  for  the  payment  of  interest.-^ 

He  recommended  "going  into  liquidation,  now,  by 
placing  those  lands,  by  legislative  enactment,  at  the  option 
of  the  holders  of  our  bonds." 

The  summary  of  conditions  in  the  message  of  the  in- 
coming governor,  Thomas  Ford,  was  quite  as  gloomy.^^  He 
showed  (1)  that  the  total  taxable  property  of  the  state 
amounted  to  less  than  seventy  million  dollars;  (2)  that  the 
state  contained  less  than  one  hundred  and  twenty-five 
thousand  men  between  fifteen  and  fifty  years  of  age  f^  ( 3 ) 
that  the  tax  rate  was  already  heavy,  being  fifty  cents  for 
county  and  thirty  cents  for  state  purposes;  (4)  that  good 
money  was  very  scarce,  probably  not  exceeding  "double 
the  amount  to  be  raised  for  taxation  for  a  single  year"; 
and  finally,  (5)  that  Illinois  was  in  the  agricultural  stage 
and  not  able  to  pay  such  high  taxes  as  commercial  and 
industrial  states.  There  was  a  bare  possibility,  he  thought, 
that  "a  most  rigorous  system  of  oppressive  taxation  would 
yield  a  sum  sufficient  to  pay  interest  for  a  single  year.  But 
such  a  tax  could  not  be  repeated." 

In  view  of  these  circumstances  it  seemed  to  the  gov- 
ernor that  nothing  remained  to  be  done  but  to  declare  the 

20The  law  fixing  this  minimum  valuation  was  repealed  in  1849.  L. 
1849,  I  Sess.,  p.  124. 

215".  /.,  13  G.  A.,  I  Sess.,  p.  18. 

*'The  census  figure  for  the  total  population  in  1840  was  476,183. 
Census  of  1870,  Population  and  Social  Statistics,  p.  23. 


85]  TAXATION   FOR  DEBT  PAYMENT,   1839-1848  85 

state  a  bankrupt.    This  he  proceeded  to  do  in  the  following 
mournful  words: 

Thus  we  arrive  at  a  conclusion  of  painful  interest,  that  the  state  is 
not  in  a  condition  to  fulfill  its  solemn  engagements.  And  however  mor- 
tifying it  is  to  our  pride,  there  is  still  one  consolation,  that  it  has  been 
produced  by  a  want  of  ability  and  not  by  a  want  of  inclination.  The  main 
thing  with  which  the  world  can  justly  reproach  us  is  that  we  were  vision- 
ary and  reckless :  that  without  sober  deliberation  we  rushed  headlong 
into  ambitious  schemes  of  public  aggrandizement,  which  were  not  justi- 
fiable by  our  resources.  Nor  are  our  original  creditors  free  from  reproach 
on  the  same  ground.  They,  as  men  of  intelligence,  sufficient  for  the 
proper  management  of  large  capital,  ought  as  well  as  ourselves,  to  have 
seen  our  future  want  of  abilitj'  and  the  constant  catastrophe  which  our 
common  error  has  produced.^* 

Eoonomic  Depression. 

Bnt  messages  to  the  legislature  pointing  out  that 
everyone  concerned  should  have  known  better  did  little 
toward  relieving  the  condition.  Moreover  the  situation 
was  particularly  acute  because  of  the  economic  depression 
which  developed  and  continued  through  1843  and  1844. 
Governor  Carlin  had  announced  late  in  1842  that  the  ex- 
pected increase  in  the  amount  of  land  becoming  taxable 
for  the  first  time  had  been  about  counterbalanced  by  the 
decrease  in  value  of  all  property  because  of  the  bad  times.^* 
In  December,  1844,  Governor  Ford  complained  that  "for 
the  last  two  seasons  the  crops  have  not  been  so  abundant 
as  usual" ;  that  high  waters  had  destroyed  much  property ; 
and,  what  is  perhaps  even  more  important,  the  people  were 
"oppressed  with  the  apprehension  of  evil  from  the  magni- 
tude of  the  state  debt."^^  The  debt  was  a  "continual  source 
of  terror  to  the  people.  They  have  lived  in  the  expectation 
of  oppressive  taxes.  ...  It  is  a  fact  too  notorious  to  be 
concealed  that  nothing  but  the  utter  impossibility  of  sell- 

2*5".  /.,  13  G.  A.,  I  Sess.,  p.  38. 

^^Ibid.,  p.  17.  This  decrease  had  taken  place,  it  should  be  noted,  in 
spite  of  the  law  fixing  the  minimum  valuation  of  land  at  three  dollars  per 
acre. 

2«5".  Repts.,  14  G.  A.,  i  Sess.,  p.  3  et  seq.  At  this  time  the  arrears  of 
state  taxes  amounted  to  $59,304,  more  than  one-third  the  annual  tax 
revenue. 


86  HISTORY  OF  TAXATION  IN  ILLINOIS  [86 

ing  rent  estate,  prevents  the  rapid  decrease  of  our  num- 
bers. "^^  "Many  would  dispose  of  their  property  at  a 
considerable  sacrifice  with  a  view  to  emigration. "^^  The 
settlers  in  the  northern  tier  of  counties  circulated  petitions 
praying  Congress  to  change  the  boundary  of  the  state  so 
as  to  include  them  within  the  limits  of  Wisconsin.^^  Im- 
migration, it  was  declared  in  1842,  had  almost  ceased.^*^ 
It  is  true  that  a  census  made  in  1845  showed  that  in  five 
years  the  population  had  increased  nearly  forty  per  cent;^^ 
and  that  the  regular  decennial  census  showed  that  between 
1840  and  1850  the  increase  had  amounted  to  nearly  eighty 
per  cent.  But  nevertheless  these  figures  reveal  a  distinct 
slowing  up  in  the  rate  of  increase,  for  during  the  preceding 
decade,  1830-40,  the  population  had  increased  two  hundred 
per  cent. 

Although  the  outlook  was  dark  and  no  one  seemed  to 
know  whence  the  necessary  funds  were  to  come,  the  people 
as  a  whole  were  never  quite  willing  to  acknowledge  that 
the  debt  could  not  be  paid.  The  faith  of  the  majority  in 
the  future  of  the  state  was  great  enough  to  silence  the 
repudiation  talk  of  the  minority.^^  The  legislators,  early 
in  1843,  with  an  empty  treasury,  ofl&cially  registered  their 
protest  against  repudiation  in  the  following  words : 

Resolved  ....  That  we  fully  recognize  the  legal  and  moral  obligations 
of  discharging  with  punctuality,  every  debt  contracted  by  any  authority, 
agent  or  agents  of  this  state  for  a  good  and  valuable  consideration ;  and 
that  the  revenues  and  resources  of  the  state  shall  be  appropriated  for  that 
purpose  as  soon  as  they  can  be  made  available  without  impoverishing  and 
oppressing  the  people.^^ 

One  might  well  ask  what  more  could  they  do.  What 
assets  the  state  owned  were  unmarketable  at  the  time.^* 

"Ibid.,  pp.  10,  II. 

28.9.  /.,  13  G.  A.,  I  Sess.,  p.  37- 

^^Niles'  Register,  LXI,  416. 

805".  /.,  13  G.  A.,  I  Sess.,  p.  27. 

^^Ibid.,  15  G.  A.,  I  Sess.,  p.  71. 

82Governor  Ford  was  firm  in  his  attitude  against  repudiation.  S.  J., 
13  G.  A.,  I  Sess.,  p.  36;  Gerhard,  Illinois  As  It  Is,  p.  105. 

88Joint  Resolution,  adopted  Feb.  21,  1843.    L.  1842-43,  p.  335. 

"A  report  on  Nov.  11,  1844,  shows  that  17,624.97  acres  of  land  had 
been  sold  by  that  date.     These  sales  produced  only  $65,031.27,  and  this 


87]  TAXATION   FOR  DEBT  PAYMENT^   1839-1848  87 

Negotiations  were  under  way  for  a  settlement  with  tlie 
banks  and  for  a  loan  for  the  completion  of  the  canal.  Noth- 
ing more  could  be  done  than  they  did,  viz.  to  declare  their 
intention  of  paying  in  full  when  able,  and  then  to  wait 
until  they  should  be  able.  This  meant  waiting  until  con- 
ditions became  such  that  large  sums  could  be  raised  by 
taxation  and  the  assets  of  the  state  in  the  form  of  land 
became  marketable. 

In  September,  1842,  state  bank  paper  was  outlawed 
for  tax  payments.^^  As  such  paper  was  much  depreciated, 
this  action,  of  course,  had  the  effect  of  making  tax  collec- 
tions much  more  difficult.  In  December,  1842,  it  was  re- 
ported that  the  people  were  "scarcely  able  to  pay"  in  specie 
the  additional  rate  imposed  for  interest  purposes.  Sympa- 
thizing with  the  tax  payers  in  their  struggles  to  meet  their 
payments  and  probably  feeling  that  the  burden  was  weigh- 
ing even  more  heavily  than  had  been  intended,  the  legisla- 
ture in  February,  1843,  decided  to  cut  the  tax  rate  for  the 
preceding:  year  in  half,  making  it  fifteen  cents  instead  of 
thirty.^*^  Any  person  who  had  already  paid  his  taxes  at 
the  thirty  cent  rate  could  substitute  one-half  the  amount 
in  specie  and  receive  back  all  he  had  paid  in.  Where  the 
taxes  were  yet  uncollected  they  were  to  be  paid  only  in 
specie  or  in  certain  types  of  auditor's  warrants.  The  state 
rate  for  1843  was  made  twenty  cents,  the  normal  tax  under 
the  act  of  1839.  No  special  ten  cent  rate  was  levied  for  the 
Interest  Fund,  the  legislature  suspending  the  law  for  1842 
and  1843.37 

The  real  purchasing  power  of  the  state  revenue  under 
the  fifteen  cent  rate,  payable  in  specie,  was  probably  fully 

sum  was  in  the  form  of  internal  improvement  bonds  and  script.  5".  Repts., 
14  G.  A.,  I  Sess.,  p.  3  et  seq.;  cf.  And.  Rept.,  1844,  p.  xxiv. 

^^The  proclamation  of  the  governor  was  reinforced  by  an  act  of  the 
legislature,  passed  February  22,  1843.  L.  1842-43,  p.  39.  The  state  had  in 
its  possession  at  this  time  $75,660  in  the  paper  of  the  banks.  Under  the 
authorization  of  the  legislature  the  treasurer  paid  this  out  at  fifty  per 
cent  discount.     Ibid.,  p.  231 ;  Treasurer's  Report,  1844,  P-  xxvii  et  seq. 

3^L.  1842-43,  p.  228. 

^''Ibid.,  p.  231. 


88  HISTORY  OF  TAXATION  IN  ILLINOIS  [88 

as  great  as  a  thirty  cent  rate,  payable  in  paper.  However, 
this  reduction,  as  well  as  the  suspension  of  the  ten  cent 
rate  for  the  Interest  Fund,  had  a  very  unfortunate  effect 
upon  the  canal  creditors.  Just  at  this  time  they  were  con- 
sidering the  proposition  that  they  lend  an  additional 
11,600,000  to  complete  the  canal,  and  before  agreeing  to 
the  proposal  were  merely  awaiting  from  the  state  some 
expression  of  willingness  to  submit  to  heavier  taxation,  if 
necessary.^ ^  The  agents  of  the  state  were  seriously  embar- 
rassed in  their  efforts  to  float  the  loan  because  of  this 
purely  nominal  but  very  ill-timed  reduction  of  the  rate  of 
taxation.^^  The  creditors  insisted  upon  the  restoration  of 
the  interest  tax,  saying  that  until  the  legislature  and  the 
people  of  the  state  "manifested  some  public  regard  to  their 
obligations,"  they  felt  themselves  unable  to  furnish  further 
funds.''^' 

Chwnges  in  Tax  Laws  and  the  Canal  Loan. 
Various  influences  combined  to  bring  about  an  in- 
crease in  the  tax  rate  in  1845.  The  governor  in  his  message 
had  pointed  out  that  the  state  taxes  were  "three  times  less 
than  they  are  in  the  great  and  flourishing  state  of  Ohio."^^ 
"It  will  be  impossible,"  he  said,  "to  raise  money  enough  by 
taxation  to  pay  the  entire  interest ;  still  something  may  be 
done."  Mention  is  heard  of  petitions  signed  by  large  land- 
holders praying  for  heavier  taxation.  "All  classes"  were 
reported  in  favor  of  it.^^    The  influence  of  the  pending  loan 

»8C/.  ibid.,  p.  54. 

^^S.  J.,  14  G.  A.,  I  Sess.,  p.  13;  5".  Repts.,  14  G.  A.,  i  Sess.,  p.  93. 
Governor  Ford  urged  that  the  rate  be  not  reduced.    ///.  Hist.  Coll.,  VII,  46. 

*^S.  Repts.,  14  G.  A.,  I  Sess.,  p.  93;  J.  W.  Putnam,  An  Economic  His- 
tory of  the  Illinois  and  Michigan  Canal  (Reprinted  from  the  Journal  of 
Political  Economy,  XVII),  p.  291 ;  Gerhard,  op.  cit.,  p.  104  et  seq. 

*^S.  J.,  14  G.  A.,  I  Sess.,  p.  18. 

*^Niles  Register,  LXVI,  340.  One  wonders,  however,  whether  the 
circulators  of  petitions  were  not  the  ovfners  of  the  lands  which  would  be 
particuarly  benefited  by  the  completion  of  the  canal  and  who  would  natu- 
rally not  be  averse  to  assuming  an  additional  tax,  along  with  all  the  other 
property  owners  of  the  state,  in  order  to  bring  about  this  desirable 
object.  This  was  certainly  the  situation  in  Chicago,  which  was  the  source 
of  other  such  petitions  during  this  period. 


89]  TAXATION   FOR   DEBT  PAYMENT^    1839-1848  89 

from  the  canal  creditors  was  probably  greater  than  any 
other  factor.  At  length  the  legislature  agreed  to  the  con- 
ditions of  the  creditors,  the  loan  being  consummated  in 
1845,*^  and  after  a  bitter  struggle  and  many  reconsidera- 
tions, a  law  reimposing  the  interest  tax  was  passed.*^ 

Resort  was  made  in  this  contingency  to  the  old  plan  of 
Governor  Carlin,  advanced  in  1840.  The  county  tax  was 
scaled  down  ten  cents  and  the  stat«  rate  was  raised  that 
amount  for  the  year  1845.^^  This  ten  cent  rate  or  one  mill 
tax,  as  it  was  more  generally  known,  was  to  be  increased 
fifty  per  cent  in  1846,  viz.  to  fifteen  cents  or  to  one  and  one- 
half  mills,  and  was  to  continue  indefinitely  at  that  rate. 

In  1845,  moreover,  the  legislature  took  occasion  to 
repeal  a  law  passed  two  years  before  which  had  modified 
in  quite  a  reactionary  fashion  some  of  the  administrative 
features  of  the  act  of  1839.^®  The  act  of  1843  had  reverted 
to  the  old  plan  of  delegating  the  assessment  to  county 
treasurers  and  collection  to  the  sheriffs.^^  It  had  done 
away  with  the  personal  calls  of  the  assessor,  providing 
instead  that  notices  should  be  posted  of  the  time  when  the 
county  treasurer  would  be  present  in  each  election  district, 
depending,  as  in  earlier  times,  upon  each  property  owner 

«///.  Hist.  Coll.,  VII,  Ixxvi. 

**Ibid.,  p.  Ixi. 

*^L.  1844-45,  P-  3  ^^  ^^Q-  The  general  limitation  on  the  county  tax  rate 
was  quite  frequently  negatived  by  special  acts  of  the  legislature  which 
empowered  particular  counties  to  increase  their  tax  rate  beyond  the  limit 
for  various  purposes.     Ibid.,  pp.  125,  126,  251. 

*^Among  the  minor  changes  during  these  years  were  several  con- 
cerned with  the  pay  of  tax  officials  (L.  1842-43,  p.  236;  L.  1&44-45,  p.  23)  ; 
specifying  the  kinds  of  money  receivable  for  taxes  (L.  1842-43,  pp.  39, 
237)  ;  exempting  land  lying  within  the  corporate  limits  of  cities  from 
taxes  for  corporate  purposes  when  not  laid  out  in  town  lots  (Ibid.,  p.  238)  ; 
exempting  property  used  exclusively  for  educational  purposes,  including 
land  up  to  160  acres  (Ibid.,  p.  70)  ;  taxing  Illinois  and  Michigan  Canal 
lands  sold  on  credit,  but  restricting  the  lien  to  the  interest  in  the  land 
paid  for  by  the  purchaser  (L.  1844-45,  p.  42)  ;  exempting  for  five  years 
internal  improvement  land  sold  (L.  1842-43,  p.  193)  ;  specifying  in  more 
detail  the  procedure  in  connection  with  the  sale  of  land  for  taxes  (Ibid., 
p.  235,  L.  1844-45,  PP-  11-13  et  seq.). 

*^L.  1842-43,  p.  231. 


90  HISTORY  OF  TAXATION  IN  ILLINOIS  [90 

to  present  himself  at  the  designated  time  and  give 
an  account  of  his  taxable  property.  Moreover,  it  had 
adopted  a  similar  plan  for  collecting  the  taxes.  The  pen- 
alties of  the  old  law  had  been  reenacted  almost  without 
change.  But  the  receipts  from  the  general  property  tax 
for  1842-44  showed  a  considerable  decrease  over  those  of 
the  preceding  biennium,  from  approximately  |280,000  to 
$225,000.  A  number  of  factors  were  responsible  for  this — 
the  change  in  the  rates,  the  general  depression  in  the  state, 
and,  perhaps,  the  change  in  the  assessment  methods.  At 
any  rate  the  legislature  made  haste  to  modify  the  assess- 
ment methods  prescribed  in  the  law  of  1843.  It  reestab- 
lished the  system  of  personal  calls  of  assessors  and  collect- 
ors. It  did  not,  however,  restore  the  former  method  of 
<?hoosing  these  officials;  the  treasurers  and  the  sheriffs 
were  to  continue  to  assess  and  collect  the  taxes  as  under 
the  law  of  1843. 

The  new  act  frankly  makes  the  law  general.  "All 
property,"  reads  the  first  section,  "real  and  personal  within 
the  state,  shall  be  liable  to  taxation."^^  The  usual  exemp- 
tions are  enumerated,  the  list  closely  approximating  that 
of  the  law  of  1839.  Real  property  was  defined  so  as  to 
include  not  only  lands  but  also  buildings  and  improve- 
ments. Personal  property  was  made  to  embrace  every 
species  of  property  not  included  in  the  description  of  real 
estate. 

But  even  with  the  banking  and  canal  indebtedness 
provided  for  and  with  a  mill  and  a  half  interest  tax  in 
effect,  the  state  was  yet  in  an  extremely  uncomfortable 
position  in  regard  to  the  state  debt.  By  December  1,  1846, 
the  new  interest  tax  had  produced  only  |62,024.33.  But 
the  yield  for  the  following  biennium  was  much  more  sub- 
stantial, amounting  to  |234,943.92.*®  However,  such  sums 
as  these  were  far  from  sufficient  to  meet  the  accruing 
interest  charges  and  of  course  could  contribute  nothing 
toward  paying  off  the  overdue  interest  or  toward  discharg- 
ing the  principal  of  the  debt. 

««L.  1844-45,  P-  3  et  seq. 

**Aud.  Kept.  1846,  p.  ii;  ibid.,  1848,  p.  v. 


91]  TAXATION  FOE  DEBT  PAYMENT,   1839-1848  91 

Improved  Outlook. 

On  the  other  hand,  in  1846,  the  general  outlook  had 
begun  to  brighten.  The  balance  against  the  treasury 
had  been  reduced  to  a  relatively  insignificant  amount, 
$31,000,  and  as  a  result,  auditor's  warrants,  which  had 
passed  at  a  fifty  per  cent  discount,  rose  to  seventy-five  per 
cent  in  1844  and  to  par  in  1846.^*^  As  soon  as  it  became 
evident  that  repudiation  would  not  be  resorted  to,  there 
was  a  favorable  reaction  in  the  market  price  of  stat€  bonds. 
Quoted  at  from  14  to  18  late  in  1842,  they  began  to  in- 
crease rapidly  in  value.^^  Moreover,  there  had  been  a 
marked  increase  in  land  sales.  From  April  1,  1844,  to 
December  1,  1846,  91,629.30  acres  of  land  were  sold — land 
which  had  been  purchased  by  the  state  in  connection  with 
the  internal  improvement  enterprise — and  f379,721.44  had 
been  realized  from  the  sales.^^  The  figures  for  the  two 
years  ending  December  1,  1848,  however,  show  a  decided 
slump,  only  15,212.42  acres  being  sold,  the  receipts  being 
167,710.21.^53 

The  question  of  increasing  the  rate  of  taxation  con- 
tinued to  agitate  the  state.  Governor  French,  late  in  1846, 
declared  that  he  did  "not  feel  called  upon  to  recommend 
any  increase.""  What  should  first  be  done  was  to  refund 
the  debt,  "preparatory  to  a  more  united  and  vigorous  exer- 
tion for  its  payment. "^5  The  debt  was  in  a  most  confused 
state.  No  accurate  record  existed  of  the  classes,  numbers, 
and  descriptions  of  the  outstanding  bonds,  so  that  it  was 
impossible  to  determine  the  precise  amounts  of  the  indebt- 
edness of  the  state,  its  character,  and  the  date  of  payment. 
The  legislature  responded  by  supplying  the  governor  with 
proper  authority  to  treat  with  the  creditors  in  regard  to 
the  matter.*^* 

»M«rf.  Rept.,  1844,  p.  23,  5".  Repts.,  15  G.  A.,  i  Sess.,  p.  2. 

»Murf.  Rept.,  1844,  p.  24;  //.  /.,  14  G.  A.,  I  Sess.,  p.  12. 

5M«rf.  Rept.,   1846,  p.  37. 

^^Ibid.,  1848,  p.  12. 

"5".  Repts.,  15  G.  A.,  i  Sess.,  p.  15. 

='L.  1846-47,  p.  161. 

'^Jbid.,  pp.  161,  167. 


92  HISTORY  OF  TAXATION  IN  ILLINOIS  [92 

Among  the  projects  brought  forward  as  a  means  for 
raising  additional  revenue  was  a  proposal  to  establish  a 
poll  tax.  But  it  seemed  wise  to  the  legislature  to  throw 
the  onus  of  such  a  measure  upon  the  constitutional  conven- 
tion, whose  delegates  were  about  to  be  chosen.^"^  Moreover, 
all  the  more  important  measures  in  taxation  seem  to  have 
been  held  in  abeyance  until  the  results  of  the  constitutional 
convention  should  become  known.  The  regular  fifteen  cent 
interest  tax,  the  twenty  cent  state  revenue  tax,  and  the 
forty  cent  county  tax  were  levied  in  1846,  1847,  and  1848. 
In  addition  a  two  cent  tax  was  levied  in  1847  and  1848  for 
the  insane  hospital.^ ^ 

^''Ibid.,  p.  33. 

^^Several  changes  of  relatively  slight  importance  were  made  in  1847. 
United  States  lands,  Congress  having  given  permission,  were  made 
taxable  as  soon  as  sold,  thus  removing  a  cause  which  had  occasioned 
great  dissatisfaction  in  earlier  years.  Supra,  p.  31 ;  L.  1846-47,  p.  83. 
An  appeal  to  the  circuit  court  was  provided  for  property  owners  who 
were  dissatisfied  with  the  decision  of  the  county  commissioner's  court  as 
to  the  correctness  of  their  assessment.  Ibid.,  p.  80.  The  penalty  upon 
sheriffs  for  delay  in  turning  over  tax  collections  was  also  reduced.  Ibid., 
p.  81. 


CHAPTER  VI 

Taxation  for  Debt  Payment   (Continued),  1848-1872 
The  Constitution  of  181^8. 

The  convention  which  framed  the  constitution  of 
1848  had  as  its  main  concern  the  formation  of  a  plan  for 
paying  off  the  state  debt.  The  instrument  which  they  pre- 
sented for  ratification  after  their  deliberations  has  been 
characterized  by  Governor  Palmer  as  "the  expression  of 
the  determination  of  the  people  of  that  day  to  meet  every 
obligation,  and  to  practice  the  most  rigid  economy,  until 
the  claims  of  the  public  creditors  were  placed  in  a  condi- 
tion that  would  satisfy  them."^  The  new  constitution 
made  sure  of  two  things :  first,  that  the  public  credit  should 
not  be  furtlier  abused,  and,  second,  that  something  should 
be  paid  every  year  upon  the  principal  of  the  state  indebt- 
edness. 

Of  least  importance,  perhaps,  were  the  provisions  for- 
bidding the  state  to  borrow  money — provisions  passed 
after  its  credit  had  been  destroyed.  The  door  of  the  empty 
treasury  was  locked  by  the  following  clause : 

No  other  debt  [beyond  a  $50,000  bond  issue  to  meet  casual  deficits  or 
failures  in  revenues]  except  for  the  purpose  of  repelling  invasion,  sup- 
pressing insurrection,  or  defending  the  state  in  case  of  war  .  .  .  shall  be 
contracted,  unless  the  law  authorizing  the  same  shall,  at  a  general  elec- 
tion, have  been  submitted  to  the  people,  and  have  received  a  majority  of 
all  the  votes  cast  for  members  of  the  General  Assembly  at  such  election. 

Moreover,  provision  for  the  payment  of  interest  was  re- 
quired to  be  made  at  the  time  of  the  authorization  of  the 
loan.^  Another  paragraph  specifies  that  "the  credit  of  the 
state  shall  not,  in  any  manner,  be  given  to,  or  in  aid  of, 
any  individual,  association,  or  corporation."^  No  state 
bank  was  to  be  created  and  the  state  was  not  to  be  liable 

'^Senate  Journal,  27  G.  A.,  i  Sess.,  p.  13. 

-Constitution  of  1848,  Art.  Ill,  §  37 ;  L.  1849,  i  Sess.,  p.  3  et  seq. 

3Art.  Ill,  §38. 

93 


94  HISTORY  OF  TAXATION  IN  ILLINOIS  [94 

for  any  stock  in  any  corporation  or  joint  stock  association 
organized  for  banking  purposes.^  The  legislature  was 
urged  to  encourage  internal  improvements,  but  only  by 
the  innocuous  method  of  "passing  liberal  laws  of  incorpo- 
ration for  that  purpose"  l^ 

The  clause  which  arouses  the  greatest  interest  is  that 
imposing  a  twenty  cent  tax  for  the  repayment  of  the  prin- 
cipal of  the  internal  improvement  loan.    It  reads : 

There  shall  be  annually  assessed  and  collected,  in  the  same  manner  as 
other  state  revenue  may  be  assessed  and  collected,  a  tax  of  two  mills  on 
each  dollar's  worth  of  taxable  property,  in  addition  to  all  other  taxes,  to 
be  applied  as  follows,  to  wit:  the  fund  so  created  shall  be  left  separate, 
and  shall  annually  on  the  first  day  of  January,  be  apportioned  and  paid 
over  pro  rata  upon  all  such  state  indebtedness  other  than  the  canal  and 
school  indebtedness,  as  may  for  that  purpose  be  presented  by  the  holders 
of  the  same,  to  be  entered  as  credits  upon,  and  to  that  extent  in  extin- 
guishment of  the  principal  of  such  indebtedness.* 

In  this  manner  the  people  bound  themselves  by  a  con- 
stitutional clause,  the  strongest  bond  possible  for  them  to 
weld,  to  tax  themselves  a  substantial  amount  for  the  pur- 
pose of  paying  off  the  principal  of  the  state  debt. 

There  was  a  movement  in  the  convention  in  favor  of 
fixing  a  maximum  rate  of  taxation.  The  committee  of 
revenue  was  by  resolution  "instructed  to  inquire  into  the 
expediency"  of  such  a  plan.  But  the  committee,  after 
some  delay,  requested  to  be  discharged  from  the  further 
consideration  of  the  matter,  and  the  constitution  went  to 
the  people  with  no  restrictions  upon  the  power  of  the  leg- 
islature to  raise  money  by  taxation.^ 

The  constitution  permitted  the  levy  of  a  poll  tax  of 
from  fifty  cents  to  a  dollar  upon  each  able  bodied,  free, 
white,  male  inhabitant  between  the  ages  of  twenty-one  and 
sixty  years.®  The  proposal  for  a  poll  tax  as  first  made  in 
the  constitutional  convention,  was  quite  different  from  that 
finally  adopted.    As  first  reported  from  the  revenue  com- 

*Art.  X,  §3. 

mid.,  16. 

«Art  XV.  . 

^Journal  of  the  Convention  of  1847  (Springfield,  1847),  pp.  88,  97. 

•Art.  IX,  1 1. 


\  - 


95]  TAXATION  FOR  DEBT  PAYMENT^  1848-1872  95 

mittee  it  was  to  be  a  compulsory  levy  for  the  specific  ob- 
ject of  paying  interest  on  the  sums  borrowed  from  the 
School,  College,  and  Seminary  Funds.^  As  finally  passed, 
the  clause  permitted,  but  did  not  direct  the  legislature  to 
levy  the  tax  and  it  specified  no  particular  object  as  the 
beneficiary. 

Of  great  interest,  also,  from  the  point  of  view  of  this 
study,  are  the  provisions  regulating  the  general  system  of 
taxation.  The  property  tax  was  prescribed  in  the  follow- 
ing language: 

The  General  Assembly  shall  provide  for  levying  a  tax  by  valuation,  so 
that  every  person  and  corporation  shall  pay  a  tax  in  proportion  to  the 
value  of  his  or  her  property;  such  value  to  be  ascertained  by  some  person 
or  persons  elected  or  appointed  in  such  manner  as  the  General  Assembly 
shall  direct  and  not  otherwise;  but  the  General  Assembly  shall  have 
power  to  tax  peddlers,  auctioneers,  brokers,  hawkers,  merchants,  commis- 
sion merchants,  showmen,  jugglers,  inn-keepers,  grocery  keepers,  toll 
bridges  and  ferries,  and  persons  using  and  exercising  franchises  and 
privileges,  in  such  manner  as  they  shall  from  time  to  time  direct.^® 

This  clause  marks  no  distinct  departure  from  the  theory 
of  the  system  already  in  force,  with  the  single  exception  of 
its  clash  with  the  minimum  valuation  law  of  1841.** 
Property  of  the  state  and  counties  was  specifically  ex- 
empted from  taxation  but  the  right  to  make  such  other 
exemptions  as  might  be  desirable  for  school,  religious,  or 
charitable  purposes  was  delegated  to  the  legislature. 

Nothing  more  of  importance  from  this  point  of  view 
was  contained  in  the  instrument  except  a  clause  providing 
for  certain  formalities  before  granting  clear  titles  to  hold- 
ers of  tax  titles  and  another  regulating  local  taxation, 
which  required  "that  all  the  property  within  the  limits  of 
municipal  corporations,  belonging  to  individuals,"  should 
be  taxed  "for  the  payment  of  debts  contracted  under  au- 
thority of  law."*^ 

In  submitting  the  result  of  its  labors  for  ratification, 
the  convention  presented  an  "address  to  the  people,"  ex- 

*Journal  of  the  Convention  of  184^,  pp.  79,  412-414. 
i«Art.  IX,  §  2. 
^^Supra,  p.  83. 
"Art.  IX,  §  5. 


/ 


96  HISTORY  OF  TAXATION  IN  ILLINOIS  [96 

plaining  the  plan  for  debt  payment  as  embodied  in  the 
new  constitution.^^  In  nineteen  years,  the  two  mill 
(twenty  cent)  tax  provided  for  in  the  new  constitution 
would  yield  enough  to  pay  the  principal  of  the  debt,  except 
for  about  |50,000.  The  principal  amounted  to  $6,245,380, 
it  was  estimated,  exclusive,  of  course,  of  canal  indebted- 
ness. The  plan  contemplated  not  only  paying  off  the 
indebtedness  before  it  became  due  but  also  paying  it  off 
before  catching  up  on  back  interest  payments,  and  even 
before  making  sure  that  current  interest  charges  would  be 
met.  Already  there  was  unpaid  accrued  interest  to  the 
amount  of  |2,248,372,  and  this  amount  would  increase  to 
$6,559,916  during  the  nineteen  year  period.  To  meet  inter- 
est charges,  there  would  be  available  about  three-fifths  of 
the  income  from  the  fifteen  cent  (one  and  one-half  mill) 
interest  tax  which  had  been  levied  since  1846,  and  which, 
it  was  proposed,  would  continue  to  be  levied.^ ^  Keceipts 
from  this  source,  it  was  frankly  recognized,  would  not  be 
sufficient  to  take  care  of  all  the  interest  charges,  but  what 
would  be  unpaid  at  the  end  of  nineteen  years  (|3,775,316, 
it  was  estimated,)  together  with  the  unpaid  principal 
(151,380)  could  be  cleared  off  by  six  years  more  of  taxa- 
tion at  the  same  rates.  "All  this,  too,"  urged  the  address, 
could  be  accomplished  "without  materially  increasing  our 
burdens,  when  viewed  in  connection  with  the  proposed 
reduction  of  state  expenses.  "^^ 

The  constitution  was  adopted  "with  a  unanimity  of 
sentiment  scarcely  paralleled."^®  The  two  mill  tax  was 
submitted  separately  and  adopted  by  ten  thousand  ma- 
jority.^ ^ 

But  the  enthusiasm  of  the  people  for  the  new  consti- 
tion  was  not  shared  by  the  bond  holders.  "You  can 
scarcely  conceive  of  the  feeling  that  exists  in  relation  to 

^^Merchant's  Magazine,  XX,  86. 

i*The  other  two-fifths  of   the  tax  was  necessary  to  meet   interest 
charges  on  canal  indebtedness. 
^^Loc.  cit. 

^•5,  /.,  i6  G.  A.,  I  Sess.,  p.  7. 
^ ^Gerhard,  Illinois  As  It  Is,  p.  132. 


97]  TAXATION  FOR  DEBT  PAYMENT,  1848-1872  97 

the  two  mill  tax  provided  for  in  the  constitution,"  \\Tote 
Julius  Wadsworth,  agent  for  refunding  the  state  debt, 
from  New  York,  in  December,  1848.  "Many  openly  de- 
nounce it  as  a  species  of  repudiation."  Strong  objection 
was  made  to  "the  gradual  reduction  of  the  principal,  leav- 
ing the  accruing  interest  unpaid  for."^*  Moreover,  he 
complained  that  from  his  point  of  view  the  law  was  im- 
practicable, for  to  pay  to  each  bondholder  his  share  of  the 
amount  which  might  be  collected  annually,  would  necessi- 
tate calling  in  all  the  certificates  each  year  and  issuing 
new  ones  in  their  place  for  the  amounts  to  which  the  bonds 
had  been  reduced  by  the  payment.  He  urged  that  the  pro- 
ceeds of  the  two  mill  tax  be  made  applicable  to  interest. 

In  spite  of  the  creditors'  clamor,  a  law  was  passed  in 
1849  carrying  the  two  mill  tax  clause  of  the  constitution 
into  effect.^^  But  soon  after,  the  legislature  proposed  a 
constitutioral  amendment  which  was  expected  to  meet  the 
difficulty;  the  revenue  from  the  tax,  instead  of  being  ap- 
plied each  year  in  driblets  to  paying  off  the  debt,  was  to 
go  to  a  sinking  fund  which  might  be  used  to  discharge  the 
indebtedness  as  it  became  due.^®  Strange  to  say,  when 
finally  this  very  reasonable  amendment  was  voted  upon  by 
the  people  in  1852,  it  was  lost.^^ 

The  tax  code  of  Illinois  w^as  destined  soon  to  adjust 
itself  into  the  form  set  by  the  constitution  of  1848.  Within 
a  few  years  the  necessary  modifications  were  made  and, 
moreover,  the  revenue  code  came  to  bear  a  remarkable  re- 
semblance to  the  present  law.  In  mere  matters  of  phras- 
ing as  well  as  in  the  more  fundamental  respects,  the  stat- 
utes as  they  stand  to-day  have  much  in  common  with  those 
of  the  early  fifties. 

As  soon  as  the  new  constitution  was  adopted,  an  im- 
mediate necessity  confronted  the  legislature  of  adapting 
the  law  to  its  provisions.^^     So  serious  did  the  necessary 

18///.  Hist.  Coll.,  VII,  294,  295. 

i^L.  1849,  I  Sess.,  pp.  126,  127.        -•, 

2»L.  1849,  2  Sess.,  p.  54;  L.  1851,  pp.  107-09. 

21G0V.  Mess.,  S.  J.,  18  G.  A.,  i  Sess.,  pp.  11,  12. 

'^S.  J.,  16  G.  A.,  I  Sess.,  p.  8. 


$8  HISTORY  OF  TAXATION  IN  ILLINOIS  [98 

changes  appear  to  the  governor  that  he  included  them 
among  his  reasons  for  calling  a  special  session  of  the  legis- 
lature.^^ 

It  is  true  that  the  minimum  valuation  law  of  1842, 
which  specified  that  no  land  in  the  state  should  be  assessed 
at  less  than  three  dollars  an  acre — a  provision  in  direct 
conflict  with  the  valuation  requirement  of  the  new  consti- 
tution— had  already  been  repealed.^*  But  a  complication 
had  been  introduced  by  the  constitutional  clause  authoriz- 
ing the  township  form  of  government.  It  was  made  op- 
tional whether  a  county  should  retain  its  old  form  of 
organization  or  should  adopt  the  township  system.  Some 
thirty  counties  immediately  adopted  the  new  system; 
others  retained  the  old.^^  This  practically  necessitated 
two  revenue  systems,  one  adapted  to  each  form  of  govern- 
ment. Here  is  the  beginning  of  the  dual  system  in  Illinois 
which  is  in  large  part  responsible  for  the  complexity  of 
the  statutes  of  that  state. 

The  township  organization  act  as  passed  in  1849  took 
the  management  of  most  fiscal  affairs  in  such  counties  out 
of  the  hands  of  the  county  court,^®  and  vested  it  in  town- 
ship officers.  A  new  bit  of  machinery  was  introduced  by 
this  law  in  its  provision  for  the  review  and  equalization  of 
assessments.  The  assessor  was  to  give  notice  of  a  time 
when  he  should  consider  complaints,  and  on  an  affidavit 
of  a  property  holder  that  the  value  of  his  personal  property 
did  not  exceed  a  certain  amount,  the  assessment  was  to  be 
reduced  to  that  figure.  Two  years  later  the  review  was 
transferred  to  a  board  which  included,  besides  the  assessor, 
the  town  clerk  and  the  supervisor.  Valuation  of  real 
property  might  be  modified  in  cases  where  a  majority  of 
the  board  deemed  it  advisable.^'  The  law  of  1849,  more- 
over, provided  for  an  equalization  of  the  township  assess- 
ments by  the  county  board  composed  of  the  supervisors  of 

2»//.  /.,  i6  G.  A..  2  Sess.,  p.  8. 
^*Supra,  p.  83;  L.   1849,  p.  124. 
'Murf.  Rept.   1850,  p.  25. 
2«L.  1849,  I  Sess.,  p.  190  et  seq. 
"L.  1851,  p.  57. 


99]  TAXATION  FOE  DEBT  PAYMENT,  1848-1872  99 

all  the  townships  included  within  the  limits  of  the  county. 
It  was  a  function  of  this  board  to  make  the  valuations  in 
one  town  bear  a  just  relation  to  those  in  other  towns.  In 
its  manipulations  the  board  was  not  permitted  to  reduce 
the  aggregate  valuations  of  all  the  towns  below  the  origi- 
nal aggregate.^* 

Both  assessors  and  collectors  were  to  be  elected  at  the 
town  meeting.^®  The  county  treasurer  was  to  assume  the 
duties  formerly  borne  by  the  sheriff  in  connection  with  the 
collection  of  delinquent  taxes. 

Probably  as  part  of  the  new  plan  of  economy,  a  law 
of  1849  forbade  the  county  clerks  to  make  out  new  lists  of 
taxable  lands  each  year,  unless  specifically  ordered  to  do 
so  by  the  county  court.  Ordinarily  they  were  merely  to 
add  new  items  to  the  old  lists.^° 

But  these  changes  were  more  or  less  hastily  made  and 
considerable  confusion  resulted  when  they  were  put  into 
operation.^ ^  It  was  evident  that  the  tax  code  needed  a 
thorough  overhauling.  Slight  modifications  were  made  in 
1851,^^  but  the  task  of  completely  revising  the  code  was 
postponed.  Meanwhile  the  auditor  was  asked  to  prepare 
a  model  revenue  bill.  He  presented  such  a  measure  to  the 
legislature  in  1852,^3  and  in  1853  a  code  was  adopted  which 
remained  on  the  statute  books  for  fifteen  years  without  a 
single  amendment  of  consequence. 

The  Revenue  Code  of  1853. 

The  new  revenue  measure  of  1853  encountered  strong 
opposition  in  the  General  Assembly.  A  great  hue  and  cry 
was  raised  because  the  new  law  required  "all  property  to 

28L.  1849,  I  Sess.,  p.  207  et  seq. 

^^Ibid.,  p.  124. 

^Mwrf.  Rept.  1850,  p.  25. 

32Closer  cooperation  was  provided  between  the  state  and  the  town- 
ship authorities.  L.  1851,  p.  58.  Inspired,  evidently,  by  a  belated  pang 
of  conscience,  the  state  made  the  riotes  and  bills  of  the  State  Bank  of 
Illinois  receivable  at  the  treasury  and  offered  to  pay  two  per  cent  interest 
on  them.     Ibid.,  p.  120. 

3M»d.  Rept.  1852,  p.  5. 


100  HISTORY  OF  TAXATION  IN  ILLINOIS  [100 

be  assessed  at  its  true  value  in  money."^^  This  seems  very 
strange  in  view  of  the  constitutional  requirement  and  the 
act  of  1849  repealing  the  minimum  valuation  law  of  the 
early  forties.  The  only  explanation  is  that  the  tax  payers, 
even  at  this  early  date,  had  become  so  accustomed  to  con- 
siderable undervaluations  that  any  other  condition  seemed 
unnatural  and  unfair. 

The  new  code  was  dual  in  form,  distinct  acts  applying 
to  township  and  to  non-township  counties.  Naturally 
enough  the  first  section,  specifying  the  property  to  be 
taxed,  was  the  same  in  each  act.    It  reads  -P 

That  all  property,  whether  real  or  personal,  in  this  state;  all  moneys, 
credits,  investments  in  bonds,  stocks,  joint-stock  companies,  or  otherwise, 
of  persons  residing  in  this  state,  or  used  or  controlled  by  persons  resid- 
ing within  this  state ;  the  property  of  corporations  now  existing  or  here- 
after created,  and  the  property  of  all  banks,  or  banking  companies,  now 
existing  or  hereafter  created,  and  of  all  bankers  and  brokers,  except  such 
property  as  is  hereinafter  expressly  exempted,  shall  be  subject  to  taxa- 
tion ;  and  such  property,  moneys,  credits,  investments  in  bonds,  stocks, 
joint-stock  companies  or  otherwise,  or  the  value  thereof,  shall  be  entered 
on  the  list  of  taxable  property,  for  that  purpose,  in  the  manner  prescribed 
in  this  act. 

Real  estate  was  so  defined  as  to  include  buildings  and 
improvements.  Under  "personal  property"  was  to  be 
listed  "every  tangible  thing,  being  the  subject  of  owner- 
ship, whether  animate  or  inanimate,  other  than  money  and 
not  forming  part  or  parcel  of  real  property."  "Money" 
included  bank  deposits  and  cash  on  hand.  "Credits"  were 
defined  as 

every  claim  or  demand  for  money,  labor,  or  other  valuable  thing,  due  or 
to  become  due,  or  every  annuity  or  sum  of  money  receivable  at  stated 
periods,  and  all  money  invested  in  property  of  any  kind  which  is  secured 
by  deed,  mortgage,  or  otherwise,  which  the  person  holding  such  deed, 
or  mortgage,  or  evidence  of  claim,  is  bound  by  any  lease,  contract  or 
agreement,  to  reconvey,  release,  or  assign,  upon  the  payment  of  any 
specific  sum  or  sums. 

Pensions,  which  would  fall  naturally  under  this  definition, 
were  exempted  from  taxation. 


^*Ibid.,  1854,  p.  s. 
"L.  1853,  pp.  3,  35. 


101]  TAXATION  FOE  DEBT  PAYMENT^,  1848-1872  101 

The  law  includes  the  following  paragraph  intended 
to  eliminate  double  taxation : 

No  person  shall  be  required  to  list  a  greater  portion  of  any  credits 
than  he  believes  will  be  received  or  can  be  collected ;  nor  any  greater 
portion  of  any  obligation  given  to  secure  the  payment  of  rent,  than  the 
amount  that  shall  have  accrued  on  the  lease,  and  shall  remain  unpaid  at 
the  time  of  such  listing.  No  person  shall  be  required  to  include  in  his 
statement,  as  a  part  of  the  personal  property,  moneys,  credits,  invest- 
ments in  bonds,  stocks,  joint-stock  companies,  or  otherwise,  which  he  is 
required  to  list,  any  share  or  portion  of  the  capital  stock  or  property  of 
any  company  or  corporation  which  is  required  to  list  or  return  its  capital 
and  property  for  taxation  in  this  state.  .  .  . 

More  liberal  reductions  were  allowed  for  debts  than 
are  permitted  at  present.  In  making  up  the  item  of 
moneys  and  credits,  the  property  owner  was  permitted  to 
deduct  all  his  hana  fide  debts,^^  with  the  qualification  that 
no  deduction  would  be  allowed 

on  account  of  a  ly  bond,  note,  or  obligation  of  any  kind,  given  to  any 
mutual  insurance  company,  nor  on  account  of  any  unpaid  subscription  to 
any  religious,  literary,  scientific,  or  charitable  institution,  or  society;  nor 
on  account  of  any  subscription  to  or  installment  payable  on  the  capital 
stock  of  any  company,  whether  incorporated  or  unincorporated. 

Foreign  insurance  companies  were  taxed  at  the  regu- 
lar rates  for  both  state  and  local  purposes  upon  their  gross 
receipts  in  the  state. 

Merchants  were  assessed  on  the  average  value  of  their 
stock  during  the  preceding  year,  manufacturers  on  the 
average  value  of  their  materials. 

The  following  peculiar  and  indefinite  provision  was 
included  to  govern  the  question  of  allowance  for  debts : 

Provided  that  from  the  value  of  any  property,  being  a  product  of  this  state, 
the  merchant  or  manufacturer  listing  the  same  shall  be  entitled  to  deduct 
the  amount  owing  by  him  for  such  property,  or  for  moneys  invested 
therein ;  And,  provided  further,  that  from  the  value  of  property,  being 
the  product  or  stock  of  this  state,  the  farmer  or  dealer  listing  the  same 
ghall  be  entitled  to  deduct  the  amount  owing  by  him  for  such  property, 
pr  for  moneys  invested  therein. 

The  exemptions  included  the  usual  items  of  property  de- 
voted to  educational,  charitabl,e,  and  burial  purposes,  of 
property  belonging  to  the  state  etc. 

3«This  provision  did  not  apply  to  banking  companies. 


102  HISTORY  OF  TAXATION  IN  ILLINOIS  [102 

Property  was  to  be  assessed  "at  its  true  value  in 
money, .  excluding  the  value  of  crops  growing  thereon.'' 
"But  the  price  for  which  property  would  sell  at  a  forced 
sale"  was  not  to  be  taken  as  the  criterion  of  such  value. 

The  most  interesting  change  in  the  plan  for  assessing 
property  was  the  introduction  of  biennial  assessments  of 
real  estate.  Before  this  time  all  property  was  assessed 
annually,  except  in  so  far  as  this  practice  was  interfered 
with  by  the  act  of  1849.^^  Under  the  new  law  (1853)  per- 
sonal property  was  valued  each  year  but  real  estate  only 
every  other  year.^^  This  change  seems  to  have  been  first 
suggested  by  the  auditor  in  his  report  for  1850.^® 

The  listing  of  personal  property  was  secured  by  the 
circulation  of  tax  lists.  Each  property  owner  was  com- 
pelled to  sign  a  statement  of  his  personal  property,  item- 
ized under  fourteen  heads.  Strangely  enough,  no  oath  was 
required.  The  reason  that  no  such  requirement  was  in- 
cluded becomes  apparent  when  one  reads  the  auditor's  re- 
port for  1854.  After  commenting  upon  the  difficulty  expe- 
rienced in  ascertaining  the  value  of  moneys  and  credits, 
where  "correct  information"  lay  "solely  within  the  knowl- 
edge of  the  owners  or  persons  controlling"  the  property, 
the  auditor  suggested  that  it  might  be  necessary  to  require 
that  such  property  be  returned  under  oath.  But  his  mis- 
givings in  regard  to  such  a  course  found  expression  in  these 
words :  "It  must  be  remembered,  however,  to  what  a  great 
extent  the  security  of  property  and  the  protection  of  char- 
acter and  life  depend  upon  the  sanctity  of  the  oath;  for 
this  reason  I  am  not  disposed  to  require  oaths  to  be  admin- 
tered  to  parties  on  matters  where  they  are  directly  and 
personally  interested,  if  it  can  be  avoided."*®  Later  expe- 
rience has  shown  that  the  dangers  mentioned  are  need- 


^''Supra,  p,  99. 

8'An  amendment  passed  in  1855  instructed  assessors  to  add  any  real 
estate  which  had  become  taxable  and  new  buildings,  and  to  subtract  in 
the  case  of  destruction  by  fire,  flood,  etc.    L.  1855,  P-  38. 

8MMrf.  Kept.  1850,  p.  24. 

*o/Wrf.,  1854,  p.  6. 


103]  TAXATION   FOB  DEBT  PAYMENT,  1848-1872  103 

lessly  encountered;  for  the  oath  seems  to  have  but  slight 
success  in  accomplishing  a  full  assessment,  the  end  de- 
sired.^ ^ 

The  dissatisfied  property  owner  was  provided,  by  the 
law  of  1853,  with  an  appeal  to  the  board  of  supervisors  in 
counties  under  the  township  system  and  to  county  courts 
in  other  counties.  The  decisions  of  these  bodies  were  not 
to  be  considered  final,  however,  until  approved  by  the  audi- 
tor of  public  accounts.*^ 

The  collection  of  the  taxes  was  to  be  accomplished  by 
advertising  the  day  when  the  collectors  would  be  present 
in  various  election  districts  to  receive  the  taxes.  Overdue 
taxes  were  subject  to  a  fifty  per  cent  penalty.  Jury  cer- 
tificates and  county  orders,  as  well  as  coin,  were  receivable 
for  county  tares  and  auditor's  warrants  were  acceptable 
for  state  taxes  levied  for  the  revenue  fund.  But  the  special 
state  taxes  were  payable  in  coin  only.*^ 

With  this  law  of  1853  in  force  Illinois  collected  the 
great  bulk  of  her  sums  for  debt  payment.  Not  a  change  of 
importance  was  made  until  1872  with  the  single  exception 
of  the  act  of  1867  establishing  the  state  board  of  equaliza- 
tion, and  this  act  was  an  addition  rather  than  an  alter- 
ation.^^ 

Financial  Oonditions. 

Having  traced  the  evolution  of  the  tax  code  during 
these  years  to  the  point  of  relative  stability  reached  in 

1853,  attention  must  now  be  directed  toward  the  use  of 

*^Infra,  p.  144.  et  seq. 

■*2In  1854  the  board  of  supervisors  was  empowered  to  amend  the 
assessment  or  to  declare  it  void  and  order  a  new  one  if  it  were  grossly 
inaccurate.     In  the  latter  case,  special  collectors  might  be  appointed.     L. 

1854,  pp.  27,  28. 

*3A  law  passed  in  1863  added  United  States  legal  tender  treasury 
notes  and  postage  currency  to  the  list  of  moneys  receivable  for  taxes. 
United  States  bank  notes  and  United  States  fractional  currency  were 
added  in  1869.    L.  1863,  p.  82;  L.  1869,  p.  353. 

**The  return  to  annual  assessments  of  real  estate  in  township  coun- 
ties is  not  of  sufficient  moment  to  be  considered  an  exception  to  this 
statement.    Aud.  Rept.  1856,  p.  5. 


104  HISTORY  OF  TAXATION  IN  ILLINOIS  [104 

the  tax  system  to  produce  the  much  needed  revenues. 
Taking  an  account  of  stock  in  1849,  the  governor  esti- 
mated the  state  debt  at  about  |16,660,000,  which  sum  in- 
cluded canal  claims  and  interest  charges  to  date.^^  Two 
years  later  his  estimate  was  but  thirty  thousand  dollars 
less  than  this  amount.^®  Under  the  funding  operations 
begun  in  1847,  some  three  million  dollars  worth  of  original 
stock  had  been  refunded  by  1849,  and  over  five  and  a  half 
million  by  1851.^' 

With  a  tax  rate  of  twenty  cents  for  interest,  twenty 
cents  for  state  debt,  fifteen  cents  for  revenue  purposes, 
two  cents  for  the  insane  hospital,  and  one  cent  for  the  blind 
asylum,  the  governor  in  1849  considered  the  state  taxes 
"as  onerous  as  the  people  ought,  at  present,  to  be  called 
upon  to  sustain."^^  The  insane  hospital  tax  was  soon  in- 
creased to  three  and  one-third  cents.*^  The  insane  hos- 
pital and  blind  asylum  rates  were  discontinued  after 
1854,  the  balances  being  turned  into  the  revenue  fund  in 
1856.^« 

In  1849  an  additional  resource  was  added  to  the 
means  for  discharging  the  state  debt,  when  a  law  was 
passed  directing  the  governor  to  invest  in  Illinois  bonds 
any  school  funds  received  from  the  United  States  govern- 
ment. Not  much  of  the  debt  was  purchased  from  this 
source,  however,  only  |139,664.31  in  all  being  used.^^ 

Conditions  in  general  continued  to  improve.  The 
assessed  value  of  property  increased  from  |82,327,105  in 
1845  to  1119,868,336  in  1850.  The  twenty  cent  rate  for 
revenue  purposes  brought  in  sufficient  revenue  to  meet  all 
demands  for  current    expenses    and    to    leave  a  surplus 

^'S".  /.,  i6  G.  A.,  I  Sess.,  p.  n;  ///.  Hist.  Coll.,  VII,  20i. 

<«//.  /.,  17  G.  A.,  I  Sess.,  p.  9  et  seq.    Cf.  Census,  1880,  VII,  625. 

*''S.  J.,  16  G.  A.,  I  Sess.,  p.  9;  Gov.  Mess.,  S.  J.,  17  G.  A.,  i  Sess., 
p.  9  et  seq. 

*^S.  J.,  16  G.  A.,  I  Sess.,  p.  8. 

<MMd.  Rept.  1850. 

6o/ft»U  1854,  1856. 

"L.  1849,  I  Sess.,  p.  70j  Aud.  Rept.  1850,  p.  17;  Repts.,  22  G.  A.,  1 
Sess.,  p.  439. 


105]  TAXATION  FOB  DEBT  PAYMENT^  1848-1872  105 

besides,  so  that  in  1850  the  auditor  was  able  to  report  that 
"for  the  first  time  since  the  formation  of  our  state  gov- 
ernment, we  have  in  the  treasury  a  sum  equal  to,  and  which 
will  be  applied  for,  defraying  the  expenses  of  the  present 
session  of  the  General  Assembly."  By  Xov.  30,  1850, 
1165,788.81  had  been  received  from  the  twenty  cent  state 
debt  tax,  and  in  the  following  two  years  $492,166.53  was 
received  in  addition  from  this  source.  The  fifteen  cent 
tax  for  interest  purposes  which  had  yielded  |234,943.92 
for  the  biennium  ending  December  1,  1848,  produced 
1296,326.89  during  the  following  two  years  and  |366,- 
393.75^2  in  the  biennium  next  succeeding.  Some  progress 
could  now  be  made  toward  debt  payment.  Between  1850 
and  1852,  $375,274.29  was  paid  from  the  State  Debt  Fund 
besides  some  minor  payments  from  other  sources.^  ^  In- 
deed, the  affairs  of  the  state  were  now  being  carried 
along  on  the  crest  of  a  wave  of  prosperity.  Exceptionally 
good  times  were  reported.  "For  the  period  embracing  the 
last  two  years,"  said  the  auditor  in  1854,^*  "no  state  in  the 
Union  has  made  more  rapid  progress  in  the  development  of 
its  resources,  and  in  the  accumulation  of  wealth,  or  can 
show  a  greater  degree  of  general  prosperity  than  the  great 
state  of  Illinois."  The  good  times  were  also  commented 
upon  by  the  governor.^^ 

The  assessed  value  of  property  increased  by  leaps  and 
bounds— to  $137,818,079  in  1851,  to  $149,294,805  in  1852, 
and  to  $225,159,633  in  1853,  the  year  the  new  revenue  law 
went  into  effect.  The  increase  for  1853,  amounting  to  over 
fifty  per  cent,  is  ascribed  by  the  auditor  almost  entirely  to 
the  natural  growth  in  value  of  property  in  the  state  and  not 
to  the  operation  of  the  new  revenue  law,  but  it  seems  doubt- 
ful whether  the  revenue   law   of   1853  should  be  denied 

'^$372.89  of  this  sum  was  refunded. 

=3These  include  $23,080.57  turned  over  to  the  governor  from  the 
School  Fund  for  the  purchase  of  state,  indebtedness,  and  payments  from 
the  Revenue  Fund  for  debt  purposes  amounting  to  something  over  ten 
thousand  dollars. 

^*Aud.  Kept.  1854,  p.  4. 

*=//.  /.,  18  G.  A.,  2  Sess.,  p.  S  et  seq. 


106  HISTORY  OF  TAXATION  IN  ILLINOIS  [106 

credit,  in  view  of  the  upward  trend  which  has  been  so 
characteristic  a  phenomenon  subsequent  to  the  introduc- 
tion of  new  revenue  codes. 

Levied  on  this  rapidly  expanding  base,  the  twenty  cent 
rate  for  revenue  purposes  increased  faster  than  ordinary 
expenses.  For  the  two  years  ending  1852,  the  revenue  tax 
yielded  $443,503.  Governor  Ford  recommended  that  the 
rate  be  reduced  to  ten  cents,^''  a  suggestion  which  was 
adopted  forthwith.  At  the  suggestion  of  the  auditor,  all 
unappropriated  and  surplus  funds  in  the  treasury  were 
to  be  turned  into  a  surplus  revenue  fund  to  be  applied  to 
the  purchase  of  state  indebtedness.^^  But  because  of  the 
cut  in  the  rate  for  revenue  purposes,  a  cut  which  reduced 
the  receipts  to  the  revenue  fund  from  $443,503  to  $387,510, 
the  amounts  turned  over  to  the  Surplus  Revenue  Fund  were 
inconsiderable.^* 

•The  State  Debt  and  Interest  Funds. 

But  in  spite  of  debt  payments,  the  governor's  estimate 
of  the  total  debt  on  January  1,  1853,  was  larger  than  that 
of  1851,  the  figure  being  placed  at  $16,724,177.  Accruing 
interest  charges  were,  of  course,  not  yet  being  met.  But 
taxable  property  was  increasing  in  the  state  more  rapidly 
than  the  interest  on  the  debt,  so  that  the  governor  esti- 
mated that  within  five  years  the  income  from  the  interest 
tax  would  be  sufficient  to  meet  the  full  amount  due  annu- 
ally upon  the  outstanding  bonds.'^®  The  task  of  paying  off 
the  debt  was  now  mucli  more  hopeful  than  it  had  seemed 
before. 

Each  year  the  receipts  into  the  State  Debt  Fund  and 
the  Interest  Fund  increased,  due  to  the  increase  of  taxable 
property  in  the  state.  Table  6  shows  the  receipts  and  dis- 
bursements for  the  State  Debt  Fund  for  the  entire  period 

^^S.  J.,  i8  G.  A.,  I  Sess.,  pp.  12,  13. 

'^''Aud.  Rept.  1852,  p.  4;  L.  1853,  p.  200. 

"*$ I. 37.053.82  was  paid  into  this  fund  in  1853  and  1854.  $117,053.82 
was  used  in  purchasing  state  indebtedness  and  the  balance,  $20,000,  was 
refunded  to  the  Revenue  Fund  in  1856. 

°^S.  J.,  18  G,  A.,  I  Sess.,  p.  10  et  scq. 


107]  TAXATION  FOR  DEBT  PAYMENT^  1848-1872  107 

during  which  the  twenty  cent  tax  was  imposed.  How  im- 
portant was  the  role  played  by  this  tax  in  paying  off  the 
state  debt  can  be  appreciated  at  a  glance. 

Table  6. 

statement  of  the  state  debt  fund. (a) 

Auditor's  Report,  Received.  Paid  Out. 

To  Nov.  30,  1850 $     165,788.81  $     

From  Dec.  i,  1850  to  Nov.  30,  1852 49?,i66.S3  395,467.96 

From  Dec.  i,  1852  to  Nov.  30,  1854. 701,220.99  545,140.80 

From  Dec.  i,  1854  to  Nov.  30,  1856 1,113,413.14  908,820.46 

From  Dec.  i,  1856  to  Nov.  30,  1858 1,387,553.92  1,244,084.69 

From  Dec.  i,  1858  to  Nov.  30,  i860 1,192,010.07  1,466,260.45 

From  Dec.  i,  i860  to  Nov.  30,  1862 148,083.11  640,462.21 

From  Dec.  i,  1862  to  Nov.  30,  1864. 589,128.94  4.50 

From  Dec.  i,  1864  to  Nov.  30,  1866 1,406,484.68  1,264,020.63 

From  Dec.  i,  1866  .0  Nov.  30,  1868. 1,669,168.80  1,489,837.25 

From  Dec.  i,  1868  to  Nov.  30,  1870. 1,637,975.39  12>2,2,(>7-'02) 

From  Dec.  i,  1870  to  Nov.  30,  1872 1,105,401.80  2,587,982.83 

Totals    _ $11,608,396.18  $11,274,630.81 

Amount  in  Treasury  in  1872 ZZZ^l^'S-yj 

Total  paid  out  and  balance $11,608,396.18 

(a)  Aud.  Rept.  1872,  pp.  xvii,  xviii. 

Tlie  receipts  of  the  Interest  Fund  were  correspond- 
ingly large,  amounting  for  the  biennium  ending  December 
1,  1854,  to  1525,931,  and  for  that  ending  December  1,  1856, 
to  1904,420.  With  such  an  income  as  this  the  state  was 
able  to  resume  complete  interest  payments  even  earlier 
than  had  been  anticipated.  In  January,  1857,  this  was 
accomplished  and  an  end  put  to  the  increase  in  the  state 
debt  through  the  cumulation  of  unpaid  interest  charges.^" 

Arrangements  were  made  to  fund  the  unpaid  interest 
which  had  piled  up  before  1857.  That  which  had  fallen  due 
before  1847  was  to  draw  interest  after  1857,  while  interest 
was  allowed  on  the  share  which  had  gone  unpaid  between 
1847  and  1857,  after  January  1,  1860.«i 

•"S".  /.,  20  G.  A.,  I  Sess.,  p.  14. 
^^Treas.  Rept.  1856,  p.  4;  L.  1857,  p.  104. 


108  HISTORY  OF  TAXATION  IN  ILLINOIS  [108 

Now  at  last  Illinois  was  once  more  financially  respect- 
able, meeting  her  legal  liabilities  in  cash  as  they  fell  due, 
and  holding  out  to  her  bond  holders  a  reasonable  expecta- 
tion of  repayment.  On  January  1,  1857,  the  net  debt  of  the 
state  was  |12,834,144,  over  four  and  a  half  million  having 
been  paid  during  the  preceding  four  years.*^^  As  expressed 
in  one  of  the  ornate  orations  of  the  day,  "The  heavy  debt, 
from  the  contemplation  of  which  so  many  shrank  back 
appalled,  now  presses  no  more  heavily  upon  her  energies 
than  the  curtain  of  the  morning  mist  rests  upon  the  bosom 
of  her  prairies. "^^ 

The  Illinois  Central  Payments. 

A  source  of  revenue  for  debt  payment  which  by  1857 
was  already  of  importance  and  which  was  destined  to  play 
a  large  part  in  the  payment  of  the  state  debt  was  the  Illi- 
nois Central  Railroad  contract.  All  railroads  in  Illinois 
were  assessed  under  the  general  property  tax  except  the 
Illinois  Central  which  was  taxed  in  a  special  manner  be- 
cause of  special  privileges  granted  to  the  railroad  by  the 
state.  It  is  not  within  the  scope  of  this  study  to  make  a 
detailed  examination  of  the  Illinois  Central  tax.  Suffice 
it  to  say  that  in  the  early  fifties  the  state  assigned  to  the 
railroad  considerable  railroad  property — salvage  from  the 
internal  improvement  project  of  1837 — and  a  princely 
grant  of  land  which  had  been  given  to  the  state  by  Con- 
gress for  the  purpose.  In  return  the  company  agreed  to 
pay  to  the  state  a  percentage  of  its  gross  receipts.  The 
rate  was  to  be  five  and  later  seven  per  cent.  This  was  in 
lieu  of  all  taxes.^* 

The  returns  from  this  contract  began  to  reach  the 
state  treasury  in  1855  and  were  devoted  to  debt  payment. 
The  amounts  received  from  the  tax  during  this  period  are 
shown  in  Table  7. 


•25.  /,,  20  G.  A.,  I  Sess.,  p.  12  et  seq. 

•^Oration  of  Robert  Bell,  Esq.,  delivered  at  Fairfield,  Illinois,  quoted 
by  Gerhard,  op.  cit.,  p.  12. 
•*Census,  1880,  VII,  625. 


109]  TAXATION  FOR  DEBT  PAYMENT,  1848-1872  109 

Table  7. 
revenue  from  the  tax  ox  the  gross  earnings  of  the 
illinois  central  railroad,  (a) 
Two  Years  Ending 

Oct.  31,  1856. $107,383 

Oct  31,  1858 277,621 

Oct.  31,  i860 „ 309,662 

Oct.  31,  1862. 389.432 

Oct.  31,  1864. „ 705,909 

Oct.  31,  1866. 923,546 

Oct  31,  1868 872^5 

Oct.  31,  1870. — __  929,518 

(o)  Compiled  from  Treas.  Rept.  1904,  p.  28.    Before  1857  the  revenues 
represent  five  per  cent  of  the  gross  earnings;  after  1857,  seven  per  cent 

But  the  dinct  financial  return  was  not  the  greatest 
benefit  conferred  by  the  Illinois  Central  Railroad.  Its  ser- 
vices in  developing  the  economic  resources  of  the  state,  in 
inducing  immigration  and  increasing  taxable  values,  just 
at  the  time  when  such  service  was  particularly  needed  to 
aid  in  the  solution  of  the  problem  of  debt  payment  can 
scarcely  be  overestimated. 

Another  source  of  debt  payment,  a  non-tax  source, 
however,  was  the  State  Land  Fund,  which  consisted  of  the 
receipts  from  the  sale  of  state  lands.  For  a  short  time 
these  amounted  to  considerable  sums.  Thus,  during  the 
two  year  period  ending  December  1,  1854,  the  receipts 
amounted  to  f 280,894,  and  during  the  following  biennium 
to  1122,812.  By  1856,  however,  practically  all  the  lands 
had  been  disposed  of.®^ 

Summary  of  the  Sources  of  Debt  Payment. 

From  these  sources,  then,  was  the  debt  paid;  (1)  the 
receipts  from  the  operation  of  the  canal  and  from  the  sale 
of  canal  lands  applied  by  the  canal  trustees  to  the  canal 
indebtedness;  (2)  the  State  Debt  Fund  supplied  from  the 
twenty  cent  (two  mill)  tax  on  property  in  general;  (3)  the 
Interest  Fund,  supplied  from  a  tax  rate  levied  on  prop- 
erty; (4)  the  Illinois  Central  fund,  supported  by  the  gross 

"Only  6458  acres  remained.    Aud.  Rept.  1856. 


110  HISTORY  OF  TAXATION  IN  ILLINOIS  [110 

earnings  payments;  (5)  the  State  Land  Fund,  consisting 
of  the  receipts  from  the  sale  of  state  lands ;  ( 6 )  the  Surplus 
Revenue  Fund,  consisting  of  left-overs,  unexpended  bal- 
ances in  the  treasury,  etc. ;  ( 7 )  borroAvings  from  the  school 
funds;  and  (8)  various  payments  from  the  Revenue  Fund 
whose  chief  support  was  the  state  rate  levied  on  property. 
In  addition  the  receipts  to  some  of  these  funds  were  in  the 
form  of  state  indebtedness  instead  of  cash.  Certificates 
of  indebtedness  Mere  received,  for  example,  in  payment  for 
state  lands.*^^ 

In  1857  and  1858  the  debt  was  reduced  |1,166,877,  so 
that  in  January,  1859,  the  amount  outstanding  against  the 
state  was  |11,138,454.«^  By  December  1,  1860,  this  figure 
had  been  cut  down  to  110,277,161.''*  But  now  the  rate  of 
taxation,  probably  because  of  the  financial  depression,  be- 
came the  object  of  bitter  complaint.**®  A  committee 
appointed  by  the  legislature  reported  in  1859  that  the 
taxes  were  "more  onerous  than  is  favorable  to  the  growth 
of  a  new  state,  whose  resources  are  developed  by  that  class 
of  population  upon  which  they  bear  most  heavily,  and  who 
will  and  do  shun  our  borders  in  consequence  of  their 
existence."'^^  The  most  attractive  point  of  attack  for  those 
who  desired  a  reduction  in  the  rates  was  the  twenty  cent 
rate  for  the  State  Debt  Fund.  The  dissatisfaction  of  the 
bond  holders  with  this  tax  has  already  been  noted.^^  The 
inconvenience  of  surrendering  their  securities  annually  to 
receive  the  dividend  due  them  was  so  great  that  many 
persons  simply  refrained  from  presenting  them.  This 
made  it  appear  that  the  tax  was  being  needlessly  assessed. 

It  has  been  decided  to  use  the  unclaimed  portion  of 
the  State  Debt  Fund  in  purchasing  state  bonds  in  the  open 
market.    But  the  rise  in  the  market  value  of  the  securities 

««/&«rf.  1850,  p.  20. 
"^5".  /,,  21  G.  A.,  I  Sess.,  p.  18. 

"This  did  not  include  the  MacAllister  and  Stebbins  claim.     Repts., 
22  G.  A.,  1  Sess,,  p.  5. 

•MMrf.  Rept.  1858,  p.  5- 

'0(7.  /I.  Repts.,  21  G.  A.,  i  Sess.,  I,  294. 

''^ Supra,  p.  96  ^f  seq. 


Ill]  TAXATION   FOB   DEBT  PAYMENT^   1848-1872  111 

made  this  course  inadvisable.  Bonds  could  only  be  bought 
at  a  considerable  premium."^  A  bill  introduced  in  1859  to 
suspend  the  collection  of  the  twenty  cent  tax  failed  to 
pass."^  But  in  1861  when  it  developed  that  less  than  three 
per  cent  of  the  fund  collected  during  the  two  preceding 
years  had  been  called  for  by  the  bond  holders,  that  the 
Revenue  Fund  was  empty,  and  that  the  assessed  value  of 
property  had  decreased,  the  legislature  held  back  no 
longer.    The  preamble  of  the  law,  as  passed,  reads : 

Whereas,  our  present  financial  condition  requires  that  provision  be 
made  for  an  increase  in  the  Revenue  Fund,  while  a  just  regard  for  the 
interests  of  our  state  and  the  prosperity  of  her  people  imperatively  de- 
mands that  such  provision  shall  be  made  without  increasing,  but  on  the 
contrary,  if  possible    by  diminishing  our  present  heavy  rate  of  taxation, 

the  collection  of  the  twenty  cent  tax  was  declared  sus- 
pended for  the  years  1861  and  1862  and  the  balance  in  the 
State  Debt  Fund,  amounting  to  more  than  |500,000  was 
turned  over  to  the  Revenue  Fund.'^ 

Finances  During  the  Civil  War. 

Even  while  these  arrangements  were  being  made,  the 
financial  problems  of  the  Civil  War  presented  themselves 
for  consideration.  In  the  next  two  years  the  bonded  debt 
was  increased  by  a  |2,000,000  issue  for  war  purposes,  a 
$50,000  issue  for  revenue  purposes,  a  |65,000  issue  for  the 
Normal  University,  and  |182,000  for  the  settlement  of  the 
"Thornton  loan."  These  amounts,  with  the  outstanding 
indebtedness  on  December  1,  1860,  brought  up  the  funded 
debt  to  |12,571,161.36.'5 

Practically  nothing  was  done  toward  the  reduction  of 
the  funded  debt  before  1863,  but  by  December  1,  1864, 
payments  from  the  canal  trustees  and  from  the  Illinois 

"^«rf.  Rept.  1858,  p.  5. 

''^G.  A.  Repts.,  2\  G.  A.,  i  Sess.  I,  293  et  seq. 

''*L.  1861,  I  Sess.,  p.  208  et  seq.  The  constitutionality  of  this  measure 
seems  to  have  been  the  subject  of  difference  of  opinion.  Cf.  Repts.  of 
Senate  Committee  on  Finance.  ' 

''^S.  J.,  23  G.  A.,  I  Sess.,  p.  26.  To  pay  interest  on  the  war  debt,  the 
auditor  levied  a  tax  of  five  cents  on  the  one  hundred  dollars  valuation. 
Ibid.  1863,  p.  II  et  seq. 


112  HISTORY  OF  TAXATION  IN  ILLINOIS  [112 

Central  Railroad,  the  only  sources  for  debt  liquidation 
since  the  suspension  of  the  State  Debt  Fund  levy,  had 
brought  this  sum  down  to  $11,246,210J« 

The  war  bonds  sold  at  a  discount,  only  |1,767,395  being 
realized  for  the  |2,000,000  issue.  The  state  may  be  con- 
sidered a  loser  to  the  extent  of  this  discount.  However,  a 
large  share  of  the  proceeds  from  the  bond  sale  was  used 
to  discharge  the  direct  tax  levied  by  the  United  States  on 
real  estate.  The  state  paid  an  assessment  of  |1,146,551.33 
with  $954,568.67,  being  able  to  take  advantage  of  the 
fifteen  per  cent  discount  allowed  where  the  states  paid  the 
money  directly.^^  The  total  claim  of  the  state  against  the 
United  States  government  on  account  of  the  war  amounted 
to  13,812,525.54.  These  claims  were  met  promptly,  |1,841,- 
129.08  having  been  refunded  to  the  state  by  1863  and  prac- 
tically the  entire  amount  by  1865.'^^  On  the  whole,  the 
war  was  far  from  a  serious  financial  catastrophe  to  the 
state  government.  The  money  cost  was  probably  not  much 
more  than  a  half  million  dollars;  but  this  does  not  take  into 
consideration  the  direct  tax  assumed  by  the  state.'^® 
General  economic  conditions  were  very  satisfactory  indeed 
during  these  years.  "As  a  state,  nowithstanding  the  war,'- 
said  the  governor  in  his  message  of  1865,  "we  have  pros- 
pered beyond  all  former  precedents."^^  Assessed  values  of 
taxable  property  decreased  somewhat,  but  in  the  opinion 
of  the  state  oflftcials  these  declines  find  an  explanation  in 
undervaluation  rather  than  in  a  true  shrinkage  of  value.*^ 

This  decrease  in  the  tax  base  was  the  cause  of  an  im- 
portant change  in  the  machinery  of  taxation.  The  assess- 
ments were  characterized  by  the  governor  in  his  message 
of  1863  as  "absurdly  low"  and  "in  many  cases  very  vari- 

^"The  policy  of  buying  bonds  in  the  open  market  was  definitely  aban- 
doned in  1863.    L.  1863,  p.  76;  S.  J.,  23  G.  A.,  i  Sess.,  p.  11  et  seq. 

''■'Ibid. 

^*The  amount  of  unsettled  claims  in  1865  was  $85,732.67.  Ibid.,  24 
G.  A.,  I  Sess.,  pp.  45,  46. 

''^Ibid.,  23  G.  A.,  I  Sess.,  p.  11  et  seq. 

*°Ibid.,  24  G.  A.,  I  Sess.,  p.  15  et  seq. 

'^Ibid.,  23  G.  A.,  I  Sess.,  p.  11  et  seq.;  Aud.  Rept.  1856,  p.  5  et  seq. 


113]  TAXATION  FOR  DEBT  PAYMENT^  1848-1872  113 

able."  "The  question  arises,'-  he  said,  "whether  some 
measures  may  not  be  devised  for  the  equalization  of  assess- 
ments throughout  the  state."^^  Beginning  with  1863  the 
assessments  show  a  steady  increase  annually,  but  there 
seems  novertheless  to  have  been  great  undervaluation.  In 
1867  the  governor  testified  that  "in  many  parts  of  the  state 
different  persons  are  taxed  25,  50,  and  100  per  cent  more, 
for  the  very  same  species  of  property,  than  other  persons 
are  in  different  counties,  for  property  of  the  same  kind. 
.  .  .  Were  the  spirit  and  the  intent  of  the  law  properly 
carried  out,  the  assessments  would  be  more  than  double 
what  they  are  now."*^ 

The  auditor  t  nd  governor  joined  in  recommending  the 
establishment  of  a  state  board  of  equalization,^^  and  their 
recommendation  was  accepted  by  the  legislature.^ 

(The  State  Board  of  Equalization. 

Under  the  provisions  of  the  act  the  governor  was  to 
appoint  one  member  from  each  senatorial  district  (there 
were  twenty-five  at  this  time)  and  these  with  the  auditor 
were  to  compose  the  board.  The  appointed  persons  were 
to  be  supplanted  by  members  chosen  at  the  elections  to  be 
held  in  1868.  The  term  was  fixed  at  four  years.  The  mem- 
bers were  paid  eight  dollars  per  day  plus  mileage  at  the 
rate  of  ten  cents  per  mile.  At  first  the  sessions  were  lim- 
ited to  fifteen  days.  In  1869  the  time  was  extended  to 
thirty  days.^^ 

The  board  was  to  assemble  at  the  state  capitol  annually 
and  after  examining  the  abstracts  of  property  assessed 
in  the  various  counties,  was  to  equalize  them  "by  directing 
to  be  added  to  the  amount  of  property  so  assessed  in  each 
county,  or  to  be  deducted  therefrom,  such  rate  per  cent  as 
said  board  may  deem  equitable."'  But  the  board  could  not 
reduce  the  aggregate  amount  of  property  assessed  in  the 

^-S.  /.,  23  G.  A.,  I  Sess.,  p.  14. 

^^Ibid.,  25  G.  A.,  I  Sess.,  p.  17.        ' 

»*Ibid.;  Aud.  Rept.  1866,  p.  6. 

*5L.  1867,  I  Sess.,  p.  105. 

««L.   1869,  p.  353.  • 


114  HISTORY  OP  TAXATION  IN  ILLINOIS  [114 

state.  Annual  assessments  of  real  estate  were  restored 
in  all  counties.  The  clause  specifying  more  in  detail  the 
manner  in  which  the  assessments  were  to  be  equalized, 
reads  as  follows: 

In  equalizing  the  value  of  personal  property  in  the  several  counties, 
said  board  shall  cause  to  be  added  together  the  average  values  of  each 
kind  of  domestic  animals  and  enumerated  articles  in  each  county,  and 
the  sum  so  obtained  as  compared  with  the  added  general  averages  of  the 
same  items  throughout  the  state,  shall  be  held  by  such  board  to  indicate 
the  proportion  which  the  whole  assessment  of  personal  property  in  each 
county  bears  to  the  whole  assessment  of  personal  property  throughout  the 
state;  and  said  personal  property  shall  be  equalized  by  said  board  in  the 
manner  hereinafter  provided  for  equalizing  real  property.  Real  property 
shall  be  equalized  by  adding  to  the  aggregate  assessed  value  thereof  in 
every  county  in  which  said  board  may  believe  the  valuation  to  be  too  low 
such  per  centum  as  will  raise  the  same  to  its  proper  proportionate  value, 
and  by  deduction  from  the  aggregate  assessed  value  thereof  in  every 
county  in  which  said  board  may  believe  the  valuation  to  be  too  high,  such 
per  centum  as  will  reduce  the  same  to  its  proper  value.  When  the  rela- 
tive valuations  of  real  and  personal  property  shall  have  been  considered 
separately,  said  board  shall  combine  the  results  in  such  manner  as  may 
be  deemed  equitable,  and  determine  a  uniform  rate  per  cent  to  be  added 
or  deducted  from  both  classes  of  property  in  each  county,  which  rate  per 
cent  shall  in  all  cases  be  even  and  not  fractional;  Provided,  that  nothing 
herein  contained  shall  be  construed  as  interfering  in  any  manner  with  the 
laws  now  in  force  in  regard  to  the  equalization  of  assessments  as  be- 
tween the  different  townships  by  the  board  of  supervisors  in  counties 
adopting  the  township  organization. 

By  an  amendment  passed  in  1869  the  board  was  to 
consider  separately  the  following  classes  of  property: 
lands,  town  and  city  lots,  railroad  property,  and  personal 
property.®'^ 

Computation  of  the  Tax  Rate. 

In  1867,  moreover,  the  present-day  method  of  com- 
puting the  tax  rate  was  introduced.®^  After  the  equaliz- 
ation had  been  accomplished  the  auditor  was  to  compare 
the  total  amount  of  the  equalized  assessment  with  the  total 
amount  of  the  appropriations  made  by  the  legislature  and 
of  the  other  demands  upon  the  treasury  and  to  strike  a 

^''Ibid.,  pp.  352,  353. 

•*L.  1867,  I  Sess.,  p.  105  et  seq. 


115]  TAXATION   FOR  DEBT  PAYMENT,   1848-1872  115 

percentage.    This  percentage  was  to  be  the  state  rate,  which 
was  then  to  be  certified  to  the  local  authorities. 

The  operation  of  this  method  resulted  at  first  in  con- 
siderable variations  in  the  rate  from  year  to  year.  The  rate 
levied  for  revenue  purposes  in  1866  had  been  twelve  cents. 
For  the  first  year  under  the  new  plan,  1867,  the  rate  was 
twenty-five  cents;  in  1868  it  dropped  to  fifteen  cents;  in 
1869  it  was  eighty  cents.  The  rates  for  1870,  1871,  and 
1872  were,  respectively,  twenty-five,  fifty-five,  and  thirty- 
five  and  three-tenths  cents.  This  irregularity  was  due  to 
the  heavier  expenses  which  were  met  in  legislative  years. 
Much  of  this  variation  from  year  to  year  has  now  been 
eliminated.*^ 

Debt  Payment,  1864-1872. 

During  the  late  sixties  great  progress  was  made  toward 
the  liquidation  of  the  debt;  |2,607,958.46  was  paid  from 
December  1,  1864,  to  December  1,  1866,  leaving  an  out- 
standing debt  of  18,638,252.21  at  the  later  date.^  A  reduc- 
tion of  about  the  same  amount,  |2,687,114.01,  was  made 
during  the  next  biennium,  the  debt  on  December  1,  1868, 
being  |5,988,453.53.  There  had  been  an  increase  of  |50,000 
in  1867,  a  bond  issue  for  the  penitentiary.^^  The  rate  for 
interest  purposes  was  reduced  to  twelve  cents  in  1867  and 
to  ten  cents  in  1868.  In  1870  it  was  done  away  with  en- 
tirely. By  December  1,  1870,  the  debt  outstanding  against 
the  state  was  but  |4,890,937.30,  and  there  had  accumu- 
lated in  the  treasury  to  meet  this  debt,  |3,082,104.22.»2 
It  might  well  be  true,  as  Governor  Oglesby  remarked  in 
1869,  that  the  debt  had  "ceased  to  cause  any  general  solici- 
tude."^^   The  receipts  from  the  canal  and  from  the  Illinois 


*^A    minor   change   in    1869  eliminated    from   the  taxable  list  goods 
belonging  to  non-residents  assigned  to  commission  merchants   for  sale 

;l.  1869,  p.  58. 

9"5".  /.,  25  G.  A.,  I  Sess.,  p.  13  et  'seq. 
*^Ibid.,  26  G.  A.,  I  Sess.,  p.  11  et  seq. 
^^Ibid.,  27  G.  A.,  I  Sess.,  p.  26  et  seq. 
^^Jbid.,  27  G.  A.,  I  Sess.,  p.  11  et  seq. 


116  HISTORY  OF  TAXATION  IN  ILLINOIS  [116 

Central  tax  were  great  enough  to  justify  the  recommen- 
dation that  the  twenty  cent  state  debt  tax  be  repealed;®^ 
and  this  tax,  which  had  been  of  such  great  assistance  in 
paying  off  the  debt  was  levied  for  the  last  time  in  1870. 
On  December  1,  1872,  the  bonded  debt  amounted  to  |2,060,- 
150.63.  During  the  preceding  two  years  |3,080,786.67  had 
been  paid,  but  a  quarter  of  a  million  of  revenue  deficit 
bonds  had  been  issued.  These  bonds  were  delivered  to  tlie 
city  of  Chicago  as  part  payment  of  a  debt  of  |2,955,340  to 
the  city,  which  the  state  at  this  time  chose  to  assume.  The 
municipality  had  advanced  funds  to  assist  in  building  the 
canal  and  had  taken  a  lien  on  the  canal  as  security.  In 
sore  need  because  of  the  devastating  fire,  Chicago  was 
to  some  extent  relieved  by  the  state  through  the  payment  of 
this  money.  A  tax  of  fifteen  cents  on  the  one  hundred 
dollars  was  authorized  for  1871  and  1872,  the  proceeds  of 
which  were  to  go  to  the  city,  along  with  the  resources 
available  from  the  Illinois  Central  Railroad  Fund  and  the 
canal.®'  By  November,  1872,  nearly  half  of  the  debt  to  the 
city  ($1,378,307.68)  had  been  discharged. 

Thus  by  1872,  when  the  new  revenue  code  was  adopted, 
the  state  debt  had  ceased  to  be  a  factor.  The  amounts 
falling  due  were  easily  met,  and  by  1881  the  state  debt  was 
declared  entirely  paid.  At  this  time  the  proceeds  from  the 
Illinois  Central  Fund  were  transferred  from  debt  pay- 
ment purposes  to  the  Revenue  Fund.  Only  $23,600  in 
bonds  was  outstanding,  which  should  have  been  presented 
years  before  and  on  which  interest  had  ceased  to  accrue."® 

Before  summarizing  the  foregoing  discussion  it  is 
necessary  to  complete  the  treatment  by  a  short  description 
of  the  special  methods  used  to  tax  banks,  insurance  com- 
panies, and  railroads,  and  of  the  taxes  levied  for  roads  and 
schools. 


^*Ibid.,  p.   14. 

'Murf.  Rept.  1872,  pp.  xi,  xii. 

••L.  1881,  p.  25.    Some  of  these  bonds  have  been  presented  since.   Cf. 
ibid.,  p.  51;  L.  1887,  p.  58;  L.  1889,  p.  49. 


117]  TAXATION   FOR   DEBT  PAYMENT^   1848-1872  117 

Taxation  of  Corporations. 

Little  special  effort  was  made  before  1872  to  tax  cor- 
porations in  any  different  manner  than  by  the  regular 
general  property  assessment.  A  law  passed  in  1851,  how- 
ever, prescribed  that  the  shares  of  the  capital  stock  of 
banks  should  be  assessed  as  personal  property,  the  value 
to  be  determined  by  the  bank  commissioners,  and  that  the 
tax  should  be  paid  by  the  corporation  and  not  by  the  indi- 
vidual stockholders.^"^  The  bank  commissioners  were 
directed  by  an  act  of  1853  >to  assess  incorporated  banks 
on  the  basis  of  note  5  and  bills  discounted.  Stocks  deposited 
by  these  incorporated  banks  with  the  state  treasurer  were 
to  be  taxed  at  the  rate  at  which  they  were  deposited.®^  In 
1857  a  law  was  passed  which  directed  the  president  or 
cashier  of  a  bank  to  list  the  capital  stock  of  his  institution 
to  be  taxed  as  other  property.  In  valuing  the  stock  he  was 
to  deduct  the  amount  of  the  capital  invested  in  real  estate 
and  list  that  separately.  Surplus  profits  and  reserve  funds 
were  also  held  to  be  taxable. 

In  1867  the  law  was  so  changed  as  to  shift  the  theoret- 
ical base  of  the  tax  from  the  corporation  to  the  stock 
holders.^®  The  value  of  the  capital  stock,  minus  the 
assessed  value  of  the  real  estate  owned  by  the  bank,  was 
assessed  to  the  owners  of  the  stock,  wherever  resident.  The 
bank  was  required  to  furnish  a  list  of  its  stockholders. 
Moreover  it  was  responsible  for  the  payment  of  the  tax. 
This  was  accomplished  through  an  arrangement  whereby  a 
part  of  the  dividends,  sufficient  to  cover  the  tax  charges, 
were  retained  by  the  banks  until  notification  was  received 
that  the  taxes  had  been  paid.  As  the  plan  actually  worked 
out,  of  course,  the  bank  assumed  all  responsibility  and  con- 
sidered the  tax  a  charge  which  had  to  be  met  before  divi- 
dends were  declared. 

From  1843  until  1853  three  per  cent  of  their  gross  pre- 
mium receipts  was    charged    foreign  life  insurance  com- 


»7L.  1851,  p.  165  et  seq. 

^L.   1853,  p.  3  et  seq.;  p.  35  et  seq. 

»»£.  1867,  I  Sp.  Sess.,  p.  6. 


118  HISTORY  OF  TAXATION  IN  ILLINOIS  [118 

panies  as  a  license  fee.^*^*^  Gross  premium  receipts  were  then 
made  assessable  under  the  general  property  tax,  at  the  same 
rates  as  personal  property.^ ''^  This  system  remained  in 
force  until  1869,  practically  until  the  end  of  the  period. 

Special  provision  was  made  for  the  taxation  of  rail- 
ways in  an  act  of  1849.  Railway  property  was  to  be  listed 
with  the  auditor  by  some  officer  of  the  corporation  and  was 
to  be  taxed  at  the  regular  rates.  The  income  from  the  taxes 
on  railways  was  to  go  toward  the  extinguisliment  of  the 
internal  improvement  debt.^^^  No  record  can  be  discovered 
of  any  revenue  collected  under  this  law.  In  1853  the  entire 
plan  of  assessment  was  changed.  The  property  of  the  rail- 
road— real  and  personal  property,  money  and  credits — was 
to  be  listed  in  the  regular  manner  with  the  assessors  of  the 
counties  where  the  property  was  located.  The  value  of  the 
movable  property  was  to  be  distributed  among  the  local 
jurisdictions  for  assessment  purposes,  in  proportion  to  the 
value  of  the  real  estate  and  fixed  property  in  each.^*^^ 

Under  a  law  passed  in  1855,^*^^  the  return  of  railway 
property  in  counties  under  township  organization  was  to 
be  made  to  the  county  clerk,  instead  of  to  the  assessor, 
and  the  clerk  was  to  lay  the  return  before  the  board  of 
supervisors  when  they  met  to  equalize  the  assessments. 
The  board  could  accept  or  modify  such  return.  In  all 
counties  the  list  was  to  be  made  up  of  four  classes  of  pro- 
erty.  The  first  was  real  property,  consisting  of  a  descrip- 
tion and  valuation  of  every  parcel  of  real  property  owned 
by  the  railway.  In  the  valuation  of  all  the  improve- 
ments except  the  track  or  superstructure  were  to  be 
included.  The  second  class,  called  fixed  and  station- 
ary personal  property,  consisted  of  the  length  and  value 
of  main  and  side  tracks  and  turn-outs  and  the  value 
of  the  improvements  at  the  stations  where  such  stations 

io»L.   1842-43,  p.  165. 
loiL,  1853,  p.  3  et  seq.;  p.  35  et  seq. 
'"2^.  1849,  2  Sess.,  p.  30. 

^o^L.  1853,  PP-  3.  35  et  seq.    The  same  system  was  applied  to  telegraph 
companies. 

"*L.  1855,  p.  35  et  seq. 


119]  TAXATION  FOR  DEBT  PAYMENT,  1848-1872  119 

were  not  part  of  city  or  town  lots.  The  third  class  con- 
sisted of  rolling  stock,  called  "personal  property." 
Finally,  the  fourth  class  included  all  other  personal 
property  of  the  railroad.  The  length  of  the  whole 
of  the  main  track  in  the  state  and  the  total  value  of  the 
rolling  stock  were  also  to  be  given.  The  rolling  stock  was 
to  be  distributed  according  to  a  new  plan,  viz.,  in  the  pro- 
portion which  the  length  of  the  main  track  in  the  juris- 
diction bore  to  the  whole  length  of  the  road.  All  other 
property  was  to  be  taxed  where  located. 

Taxation  for  Roads  and  Schools. 

The  poll  tax  continued  to  be  the  main  support  of  the 
roads.  By  the  act  of  1841^*^^  authority  was  given  to  re- 
quire from  one  to  five  days  of  service  on  the  roads.  But  a 
supplementary  tax  on  property  was  also  provided.  The 
maximum  of  this  tax  varied:  it  was  ten  cents  on  each  one 
hundred  dollars  of  valuation  in  1841;  twenty-five  cents  in 
1843,^<'«  and  twenty  cents  in  1845.^  «^ 

Road  taxes  were  levied  by  the  counties  until  1849 
when  that  function  was  surrendered  to  the  townships  in  the 
counties  which  elected  to  organize  under  the  township  sys- 
tem. For  each  township  organized,  highway  commissioners 
were  elected.  Use  was  made  of  both  the  poll  tax  and  the 
tax  on  property.  All  taxable  property  was  levied  upon 
for  road  purposes  with  this  exception,  that  for  ten  years, 
1851-1861,  only  real  property  was  available  for  this  pur- 
pose. '^^^  From  1851  to  1867  the  maximum  levy  on  property 
for  road  purposes  was  twenty  cents  on  the  one  hundred 
dollars  of  taxable  property ;  after  1867  the  limit  was  forty 
cents. 

Before  1869  any  tax  payer  who  desired  to  do  so  could 
'''work  out"  his  property  tax  on  the  roads.^'^^    After  1869, 

^o'L.  1840-1,  p.  237. 

i"«L.  1842-3,  p.  III. 

lo^L.  1844-S,  p.  79.  ^ 

108L.  1851,  p.  66. 

i°^At  first  his  labor  for  an  eight  hour  day  was  valued  at  only  $0.62^. 
This  amount  was  increased  to  $0.75  in  1851,  but  it  remained  at  that  figure 
until  the  end  of  the  period,  1872. 


120  HISTORY  OF  TAXATION  IN  ILLINOIS  [120 

however,  the  township  determined  by  a  majority  vote 
whether  the  labor  system  should  be  used  at  all.^^** 

Non-residents,  of  course,  could  not  be  compelled  to 
labor  on  the  roads.  But  under  the  first  township  organiza- 
tion act  their  land  was  subjected  to  a  special  levy  to  com- 
pensate for  the  poll  tax  imposed  upon  residents.  The 
charge  upon  his  land  was  so  planned  that  each  non-resi- 
dent had  to  provide  one  day's  road  labor  for  each  |300 
worth  of  land. 

The  practice,  now  so  common  in  Illinois,  of  vesting 
independent  boards  with  taxing  powers,  was  not  highly 
developed  during  the  debt  payment  period.  The  best 
example  is  that  accorded  by  the  boards  which  levied 
taxes  for  school  purposes.  The  first  levies  of  this  kind 
seem  to  have  been  made  in  1855.  School  taxes  before  that 
time  were  authorized  by  special  vote  of  the  people,  and 
collected  by  a  special  collector.  The  distinctive  taxing 
authority  has  always  been  the  board  of  school  directors, 
or  in  cities,  the  board  of  education,  such  a  board  being 
provided  for  each  school  district.^^^  The  law  of  1855  gave 
power  to  these  boards  to  determine  the  sum  necessary  to 
maintain  the  schools  for  six  months.^  ^^ 

The  law  of  1857  put  no  limit  on  the  taxing  power  of 
the  boards  when  the  receipts  were  to  be  used  for  ordinary 
expenses"^;  but  when  money  was  needed  for  such  pur- 
poses as  purchasing  buildings  and  grounds  and  for  extend- 
ing the  school  term  beyond  six  months,  a  majority  vote 
of  the  electors  was  necessary  to  levy  the  tax. 

Summary  and  Criticism. 

In  the  foregoing  pages  an  attempt  has  been  made  to 
tell  briefly  the  story  of  the  payment  of  the  state  debt.  As 
has  been  seen,  the  state  learned  the  joy  of  spending  bor- 

^^OL.  1869,  p.  406. 

mAn  exception  should  be  noted;  the  Board  of  Township  School 
Trustees  for  two  years,  1855-57,  were  empowered  to  levy  a  deficiency 
tax.    L.  1855,  p.  79. 

"2£,.  185s,  p.  51  et  seq. 

"«L.  1857,  p.  274. 


121]  TAXATION  FOR  DEBT  PAYMENT^  1848-1872  121 

rowed  money  before  it  had  learned  the  terrors  of  heavy 
taxation.  Before  1838  the  rates  of  taxation  were  almost 
insignificant,  and  the  methods  of  assessment  and  collection 
were  extremely  crude.  Under  the  pressure  of  necessity,  the 
tax  system  was  improved  until  in  1853  it  approximated 
very  closely  the  code  of  1872  which  is  still  in  force  to-day. 

The  changes  in  the  tax  laws  began  in  1839  when  the 
rough  classification  of  lands  into  grades  for  taxation  pur- 
poses was  replaced  by  a  plan  which  assessed  land  at  its: 
true  value.  Taxable  T)roperty  was  more  closely  defined  and 
personal  property  was  made  taxable  for  state  as  well  as 
local  purposes.  The  assessor  was  to  make  personal  visits: 
upon  property  owners  and  was  authorized  to  administer 
oaths. 

A  backward  step  was  taken  in  1841  when  a  law  was 
passed  fixing  a  minimum  valuation  of  land.  Moreover,  a 
law  passed  two  years  later  reverted  to  some  of  the  anti- 
quated assessment  and  collection  methods  of  the  previous 
period.  But  laws  passed  in  1845  and  1849  set  all  these 
matters  right  again. 

The  general  property  tax  was  prescribed  in  the  consti- 
tution of  1848,  a  tax  was  imposed  for  debt  payment,  and  a 
township  system  of  organization  was  provided  for  such 
counties  as  desired  it.  Some  modifications  were  made  in 
the  statutes  to  accommodate  them  to  the  new  constitution. 
But  a  thorough  revision  of  the  code  was  not  made  until 
1853. 

If  to  the  code  of  1853  one  adds  an  oath  requirement, 
the  railway  tax  law  of  1855,  and  the  sections  dealing  with 
the  state  board  of  equalization,  the  result  would  closely  re- 
semble the  present  tax  code  of  the  state.  The  description  of 
taxable  property  and  the  general  processes  of  assessment 
and  collection  are  strikingly  similar.  It  was  under  the 
provisions  of  this  law  of  1853  that  the  people  of  Illinois 
raised  such  enormous  sums  for  debt  payment. 

Before  1848,  when  the  new  constitution  was  drafted, 
the  state  was  in  no  position  to  raise  large  sums  by  taxation. 
Only  the  remarkable  economic  development  of  the  state  in 


122  HISTORY  OF  TAXATION  IN  ILLINOIS  [122 

the  thirty  years  under  discussion  made  the  payment  of  the 
debt  possible.  It  can  not  be  too  strongly  stated  that  there 
was  no  magic  in  the  manner  in  which  the  debt  was  cleared 
away.  The  general  property  tax  was  helpless  in  the  early 
forties  and  had  to  wait  until  economic  conditions  reached 
the  stage  where  large  levies  might  safely  be  made.  Between 
1840  and  1870  the  population  increased  five  hundred  per 
tent  (from  476,183  to  2,539,891).  In  1850  the  state  con- 
tained only  one-third  as  many  people  as  in  1870  (851,951). 
In  1850  Chicago  contained  29,963  persons ;  in  twenty  years 
it  increased  ten-fold. ^^^ 

The  assessed  values  of  taxable  property,  in  spite  of 
the  fact  that  they  are  much  smaller  than  they  should  be, 
tell  the  same  story  of  remarkable  expansion.  Table  8 
shows  the  local  assessments  year  by  year. 

Table  8.  (a) 

LOCAL  ASSESSMENTS,  1839-1872. 

1839 58,889,525  1856 349,951,272 

1840 58,752,168  1857 407,477,367 

184I 70,166,053  1858 403,140,321 

1842 72,605,424  1859 -  366,702,053 

1843. 72,416,800  i860. 367,227,742 

1844- 75,747,765  1861 330,823,479 

1845 82,327,105  1862 312,924,349 

1846 88,815,403  1863 331,999,871 

1847 92,406,493  1864. 356,877,837 

1848 102,132,193  1865 392,327,906 

1849 105,432,752  1866 410,894,993 

1850 119,868,336  1867 502,638,344 

185I 137,818,079  1868 464,278,913 

1852 149,294,805  1869 480,859,732 

1853 225,159,633  1870. 480,031,703 

1854 252,756,568  187I 499,636,910 

i8ss 334,398,42s  1872 508,875.392 

(a)J.   A.  Fairlie,  Report  on  the   Taxation  and  Revenue  System  of 
Illinois  (Danville,  Illinois,  1910),  pp.  202,  203. 

From  the  data  presented  in  this  table  and  the  census 
figures  given  above  it  would  appear  that  the  assessed  value 
of  taxable  property  increased  twice  as  fast  as  population. 

^^*Census  of  1850,  p.  701 ;  Census  of  1870,  Population  and  Social  Sta- 
tistics, pp.  23,  no. 


123]  TAXATION  FOR  DEBT  PAYMENT^  1848-1872 


123 


Table  9. 
state  tax  rates,  1839-1872. 


Date 

1839 
1840 
1 841 
1842 

1843 
1844 

184s 
1846 
1847 
1848 
1849 
1850 
1851 
1852 
1853 
1854 
1855 
1856 
1857 
1858 

1859 
i860 
1861 
1862 
1863 
1864 
1865 
1866 
1867 
1868 
1869 
1870 
1871 
1872 


Revenue  Interest 
Cents   Cents 

20 

20 

20     10 

15 
20 
20 
20 
20 
20 
20 
20 
20 
20 
20 
10 
10 
12 


Insane 
Hosp. 
Cents 


12=* 
12 
12* 
12 


12 
12 
12 
12 
25 
IS 
80 

25 

55 
35Vi( 


10 
15 
15 
15 
15 
IS 
15 
15 
15 
15 
15 
15 
15 
15 
15 
IS 
IS 

15 

IS 
IS 
IS 

15 

12 
10 

10 


4V1, 


2 
2 
2 
2 


State 
Debt. 
Cents 


20 
20 
20 
20 
20 
20 
20 
20 
20 
20 
20 
20 


2Xr 

20 

20 

20 

20 

20 

20 

20 


Blind 

Asylum 

Cents 


School 
Fund 
Cents 


Canal 
War      Redempt- 
Interest    tion  Fd. 
Cents      Cents 


20 
20 
20 
20 
20 
20 
20 
20 
20 
20 
20 
20 
20 
20 
20 
20 
20 
20 


15 
15 


Total 
Cents 

20 

20 

30 

15 

20 

20 

30 

35 

Z7 
2,7 
58 
58 

49H 

49^ 

67* 

67 

67* 

67 

67* 

67 

40* 

40* 

72* 

72* 

72 

70 

77 

65 

130 

65 
90 

75 


*No  officer  of  the  government  took  it  upon  himself  to  report  regu- 
larly the  rate  of  taxation  levied  each  year.  The  information  given  above 
has  been  gathered  from  widely  scatteijed  sources — all  official,  however. 
No  direct  statement  was  found  to  the  effect  that  the  rates  marked  with 
the  asterisks  were  actually  levied.  The  data  in  these  cases  are  based  upon 
laws  authorizing  the  levies.  The  total  rate  for  1852  is  given  as  60^. 
One  statement  was  found  which  gave  this  rate  as  60,  but  it  is  believed 
that  this  is  a  misprint.    Aud.  Rept.  1854,  p.  Ixv. 


124  HISTORY  OF  TAXATION  IN  ILLINOIS  [124 

The  rates  levied  upon  this  taxable  property  varied 
greatly  during  the  period.  Table  9  gives  these  rates  so  far 
as  it  has  been  possible  to  determine  them.  The  rate  for 
revenue  purposes  shows,  until  the  later  years,  a  tendency 
to  decrease.  It  is  in  this  rate  that  the  greatest  irregulari- 
ties appear,  due  to  its  determination  in  the  late  years  of 
the  period  on  the  basis  of  the  appropriations  made  by  the 
legislature.  More  or  less  complaint  was  made  of  the 
weight  of  the  taxes  all  through  the  period,  but  particularly, 
as  one  would  expect,  during  the  years  of  industrial  depres- 
sion. 

During  this  period  the  general  property  tax  estab- 
lished its  reputation.  But  its  good  name  rests  entirely 
upon  a  fiscal  foundation.  It  succeeded  in  bringing  large 
sums  into  the  treasury,  but  this  end  was  accomplished  only 
at  the  cost  of  considerable  injustice  and  inefficiency.  All 
through  the  period  the  assessors  found  difficulty  in  reaching 
all  property  and  assessing  it  at  its  real  value.  One  who 
believes  that  complaints  about  the  tax  system  are  of  recent 
origin,  that  they  are  hasty  attacks  of  reformers  upon  an 
institution  with  a  long  and  honorable  history,  will  be 
quickly  disillusioned  if  he  reads  the  official  documents  of 
the  debt-payment  period.  Property  in  general  was  under- 
valued fifty  per  cent  in  1852.  Moreover,  there  were  great 
inequalities.  "Property  of  equal  value  in  adjoining  coun- 
ties was  assessed  at  rates  varying  fifty  per  cent  and  in 
some  cases  even  more."^^^ 

The  law  of  1853  did  not  help  matters  much.  "Either 
the  law  is  not  understood  or  it  is  not  considered  good  au- 
thority," was  the  discouraged  conclusion  of  the  auditor, 
for  in  his  opinion  there  could  "be  little  doubt"  that  there 
was  great  undervaluation.^^®  The  following  excerpt  from 
the  auditor's  report  for  1862  has  a  familiar  ring : 

I  have  learned  of  several  instances  where  candidates  for -■the*  office 
of  assessor  have  openly  offered,  as  an  inducement  to "  voter?,  <  that,  if 
elected,  they  would  assess  property  at  rates  less  than  its  valyci  .  It  has 
also  been  suggested  to  me  that  it  is  the  practice  of  town  assessors  to'meet 

"MMrf.  Kept.  1854,  p.  5. 
"  •/&»■(/.  1856,  p.  5. 


125]  TAXATION  FOB  DEBT  PAYMENT^  1848-1872  125 

and  agree  on  fixed  uniform  rates  for  valuing  each  description  of  property 
taxed,  without  regard  to  the  lands  or  other  property  listed.^^'^ 

In  1866  the  valuations  were  declared  by  the  auditor  to 
be  "manifestly  below  the  actual  worth  of  the  property."^^^ 
In  spite  of  the  efforts  of  the  state  board  of  equalization, 
undervaluation  persisted  to  the  very  end  of  the  period.  In 
1870  the  assesment  of  property  did  "not  exceed  .  .  .  one- 
quarter  of  its  actual  value."^^^ 

In  addition  to  tie  undervaluation  and  inequality,  the 
assessment  was  marked  by  a  considerable  degree  of  irregu- 
larity. The  case  of  the  refusal  of  the  officers  in  various 
counties  to  assess  property  under  the  act  of  1837  has 
already  been  noted. ^^'^  Less  serious  disturbances  and  de- 
lays are  referred  to  in  almost  every  volume  of  the  session 
laws.^^^  In  1846  the  auditor  complained  that  at  least  one- 
half  the  assessors  did  not  complete  their  assessment  within 
the  period  required  by  law.^^^  Tardiness  and  irregularity 
in  assessments  involved  irregularities  in  collection  and 
difficulties  in  tax  sales.^^^  In  addition  there  seems  to  have 
been  considerable  dishonesty  among  collectors.  In  1850, 
the  auditor  complained  about  "the  large  amount  lost  annu- 
ally by  defalcation  of  collectors."^^^ 

In  spite  of  poor  administration  the  tax  system  proved 
equal  to  the  strain  laid  upon  it  in  the  debt-payment  period. 
Even  with  the  complications  of  the  Civil  War  the  system 
emerged  with  a  good  record  as  a  revenue  producer.  But 
the  highest  praise  which  can  fairly  be  given  the  general 
property  tax  in  this,  the  most  successful  period  of  its  exist- 
ence, is  to  say  that  it  was  a  system  which  fitted  in  a  rough 
and  ready  fashion  the  rather  crude  economic  conditions  of 
the  time. 

^"Ibid.  1862,  p.  S. 
"8/&trf.  1866,  p.  6. 
"9/fctU  1870,  p.  4. 
^"^^ Supra,  p.  82. 

121c/.,  L.  1842-43,  p.  14;  L.  1849,  I  5ess.,  p.  121 ;  L.  1853,  p.  236  etc. 
i22^Mrf.  Rept.   1846,  p.  38. 

123C/.,  ihid.,  1848,  p.  15;  ibid.,   1850,  p.  2;  L.  1844-45,  pp.  163,  183,  199; 
L.   1846-47,  p.  75  et  seq. 

^^*Aud.  Rept.   1850,  p.  23;  cf.,  L.   1842-43,  pp.  68,  239. 


D.     THE  PRESENT-DAY  PERIOD,  1872-1913 

CHAPTER    VII 

Taxable  Property  in  General  and  its  Assessment 

In  1910  Illinois  with  5,638,591  people  was  the  third 
state  in  the  union  in  population;  in  1870  it  had  less  than 
half  that  number  (2,539,891).  In  the  importance  of  its 
manufactures  it  was  surpassed  only  by  New  York  and 
Pennsylvania,  but  the  rate  of  increase  in  Illinois  has  been 
greater  than  either  of  these  states.  Between  1902  and 
1909  the  state  has  pushed  from  sixth  to  second  rank  in 
mining.^  A  few  facts  such  as  these  are  sufficient  to  show 
clearly  that  the  problems  of  Illinois  are  no  longer  the  prob- 
lems of  a  thinly  settled,  agricultural  community.  Com- 
merce and  industry  have  developed  and  have  earned  for 
themselves  places  beside  agriculture.  Moreover,  Chicago, 
with  less  than  300,000  inhabitants  in  1870,  has  grown  to 
be  the  second  city  in  the  United  States  and  her  growth  has 
raised  problems  for  Illinois  which  can  scarcely  be  matched 
by  those  in  any  other  state.  Within  one  hundred  years 
this  whole  development  has  come  about.  A  century  ago 
there  were  no  cities,  no  mines,  no  commerce,  no  manufac- 
tures, and  almost  no  population.  During  this  entire  time 
the  principle  of  the  general  property  tax  has  been  in  force. 
How  slight  were  the  modifications  made  in  the  system  must 
have  been  impressed  upon  any  one  who  has  read  the  fore- 
going pages.  The  origin  of  the  system  and  its  adaptation 
to  the  needs  of  the  trying  period  of  debt  payment  have  been 
described.  It  remains  to  show  to  what  extent  the  present 
code,  arrived  at  after  a  slow,  evolutionary  process,  and 
established  in  almost  exactly  its  present  form,  over  forty 
years  ago,  has  met  the  needs  of  this  new  industrial  state. 

^Thirteenth  Census,  Abstract,  p,  543. 

126 


127]  TAXABLE  PROPERTY  AND  ITS  ASSESSMENT  127 

The  revenue  law  in  force  in  the  state  was  formulated 
in  1872.  It  rests  upon  the  foundation  laid  by  the  revenue 
section  of  the  constitution  of  1870.  The  law  has  been 
modified  in  a  number  of  particulars  during  the  last  forty 
years,  especially  in  1898,  when  the  assessment  arrange- 
ments were  given  an  overhauling,  but  it  has  never  been 
supplanted  by  a  new  general  law.^  When  it  was  intro- 
duced in  1872  it  was  not,  in  many  particulars,  a  new  law ; 
it  was  for  the  most  part  merely  a  codification  of  statutes 
already  existing.  Certainly  such  a  codification  was  needed, 
for  it  appears  from  the  repealing  clause  that  the  new 
measure  replaced  nearly  fifty  old  acts  of  the  legislature.^ 

The  movement  for  a  new  revenue  law  in  1872  seems 
to  have  found  its  source  in  the  state  board  of  equaliza- 
tion, which  as  a  fountain  of  reform  suggestions  has  long 
since  gone  dry.  In  taking  up  its  duties  in  1867  the  board 
found  the  existing  code  to  be  inadequate  and  ineffective. 
In  1868  resolutions  were  passed  recommending  a  revision 
of  the  law.*  Three  years  later  the  revenue  measure,  drawn 
up  by  the  chairman  and  secretary  of  the  board,  was  laid 
before  the  General  Assembly.  While  under  consideration 
it  was  actively  supported  by  the  board  and  upon  its  adop- 
tion, the  board  did  not  hesitate  to  assume  credit  and  re- 
sponsibility for  the  new  law.'* 

CONSTITUTIONAL  PROVISIONS. 

Although  the  new  law  was  passed  soon  after  the  adop- 
tion of  the  constitution  of  1870  it  can  not  be  said  to  have 
been  made  necessary  by  the  constitution;  for  the  revenue 
article  in  the  new  constitution  did  not  differ  greatly  from 
that  of  the  constitution  of  1848. 

The  necessary  state  revenue  was  to  be  obtained,  as 
under  the  old  constitution,  by  a  tax  which  should  fall 
upon  the  owners  of  property  in  proportion  to  the  value  of 

2L.  1898,  p.  26. 

^L.  1871-72,  p.  69. 

*Proceedings  of  the  State  Board  of  Equalization,  1868,  p.  81. 

'^Ibid.,  1867.  pp.  37-39,  58,  59;  1870,  Oct.  7  to  Oct  27;  1872,  p.  61. 


128  HISTORY  OF  TAXATION  IN  ILLINOIS  [128 

the  property  owned.  No  provision,  it  was  true,  was  made 
for  a  capitation  tax.  The  list  of  "pedlars,  auctioneers, 
etc.,"  who  could  be  taxed  in  such  manner  as  the  assembly 
should  direct,  was  augmented  by  the  addition  of  liquor 
dealers,  insurance,  telegraph  and  express  interests  or  busi- 
ness, vendors  of  patents,  and  corporations  owning  or  using 
franchises  or  privileges ;  but  a  specification  was  added  that 
such  taxes  should  be  levied  by  general  law  and  be  made 
uniform  as  to  the  class  affected.  The  exemption  clause 
w^as  made  more  specific;  property  "used  exclusively  for 
agricultural  and  horticultural  societies,  for  school,  reli- 
gious, cemetery  and  charitable  purposes,"  might  be  re- 
lieved of  tax  charges.  Some  modifications  w^ere  made  in 
the  provisions  regulating  tax  sales  and  redemption,  mak- 
ing them  more  general.  The  General  Assembly  was  for- 
bidden to  release  any  local  body  from  its  share  of  the 
state  tax.®  All  taxes  levied  for  state  purposes  were  to  be 
paid  into  the  state  treasury.  A  tax  limit  of  seventy-five 
cents  on  the  hundred  dollars  valuation  was  imposed  upon 
counties,  exception  being  made  in  case  the  tax  was  levied 
to  pay  debts  previously  contracted.  A  higher  rate  might 
be  levied,  however,  upon  vote  of  the  people.  A  debt  limit 
of  five  per  cent  of  the  assessed  valuation  was  placed  upon 
all  local  bodies;  and  such  bodies,  when  incurring  a  debt 
in  the  future,  were  required  to  make  provision  for  the 
accumulation  of  a  repayment  fund  through  direct  taxa- 
tion.'^ Local  improvements  might  be  paid  for  "by  special 
assessments  or  by  special  taxation  of  contiguous  property 
or  otherwise." 

PROPERTY  TAXED  AND  EXEMPTED. 

The  general  statement  of  property  subject  to  taxation 
in  Illinois  since  1872  reads  as  follows:  first,  all  real  and 
personal  property  in  this  state;  second,  all  moneys,  cred- 

*By  an  act  passed  in  1872,  the  legislature  sought  to  bring  about  the 
condition  of  uniformity  prescribed  here.    L.  1871-72,  p.  753. 

^This  does  not  comprehend  the  amendment  of  1890  for  World's  Fair 
bonds.    L.  1890,  p.  8. 


129]  TAXABLE  PROPERTY  AND  ITS  ASSESSMENT  129 

its,  bonds  or  stocks  and  other  investments,  the  shares  of 
stock  of  incorporated  companies  and  associations,  and  all 
other  personal  property,  including  property  in  transitu  to 
or  from  this  state;  third,  the  shares  of  capital  stocks  of 
banks  and  banking  companies  doing  business  in  this  state ; 
and  fourth,  the  capital  stock  of  companies  and  associations 
incorporated  under  the  laws  of  this  state.^ 

This  statement  of  taxable  property  has  stood  undis- 
turbed during  the  entii\^  forty  years,  except  for  one  amend- 
ment in  1905  which  exempted  the  capital  stock  of  certain 
corporations  but  which  was  promptly  declared  unconsti- 
tutional.* 

Of  the  property  included  in  the  foregoing  statement 
the  following  classes  have  been  designated  by  the  General 
Assembly  as  exempt  from  taxation  :^^ 

first,  school  lands  donated  by  the  United  States,  not  sold  or  leased  and 
all  property  used  exclusively  for  school  purposes  ;^^  second;  all  property 
used  exclusively  for  religious  purposes,  or  used  exclusively  for  school 
and  religious  purposes,  and  not  leased  or  otherwise  used  with  a  view 
to  profit  ;i2  third,  all  lands  used  exclusively  as  grave  yards  or  grounds  for 

*L.  1871-72,  p.  I. 

^Infra,  p.  201 ;  L.  1905,  p.  353 ;  Consolidated  Coal  Co.  v.  Miller,  236 
Illinois  149  (1908). 

i^The  constitutional  provision  under  which  these  exemptions  have  been 
made  reads  as  follows : 

"The  property  of  the  state,  counties,  and  other  municipal  corporations, 
both  real  and  personal,  and  such  other  property  as  may  be  used  exclusively 
for  agricultural  and  horticultural  societies,  for  school,  religious,  cemetery, 
and  charitable  purposes,  may  be  exempted  from  taxation ;  but  such  ex- 
emption shall  be  only  by  general  law.  In  the  assessment  of  real  estate 
encumbered  by  public  easement,  any  depreciation  occasioned  by  such 
easement  may  be  deducted  in  the  valuation  of  such  property."  Par.  3, 
Art.  VIII,  Constitution  of  1870. 

The  language  of  the  law  of  1909  exempts  all  property  belonging  to 
schools,  whether  it  is  exclusively  devoted  to  school  purposes  or  not,  pro- 
vided that  it  is  not  used  with  a  view  to  profit.  The  supreme  court  has 
declared  this  broad  exemption  unconstitutional.  The  People  v.  Deutsche 
Gemeinde,  249  III.  132  (1911). 

"L.  1913,  p.  511.  In  1909  the  wording  was  changed  from  that  of  the 
act  of  1872.    L.  1909,  p.  309. 

^^The  law  of  1872  was  slightly  narrower  than  this.  L.  1S71-72,  p.  I ; 
L.  1909,  p.  307.    In  1905  residences  used  by  persons  devoting  their  entire 


130  HISTORY  OF  TAXATION  IN  ILLINOIS  [130 

burying  the  dead ;  fourth,  all  unentered  government  lands ;  all  public  build- 
ings or  structures  of  whatsoever  kind,  and  the  contents  thereof,  and  the 
land  on  which  the  same  are  located,  belonging  to  the  United  States ;  fifth, 
all  property  of  every  kind  belonging  to  the  State  of  Illinois ;  sixth,  all  prop- 
erty belonging  to  any  county,  town,  city,  or  village,  used  exclusively  for  the 
maintenance  of  the  poor ;  all  swamp  or  overflowed  lands  belonging  to 
any  county,  so  long  as  the  same  remain  unsold  by  such  county;  all  public 
buildings  belonging  to  any  county,  township,  city  or  incorporated  town, 
with  the  ground  on  which  such  buildings  are  erected,  not  exceeding  in 
any  case  ten  acres ;  seventh,  all  property  of  institutions  of  public  charity, 
when  actually  and  exclusively  used  for  such  charitable  purposes,  not  leased 
or  otherwise  used  with  a  view  to  profit;  and  all  free  public  libraries ;i3 
eighth,  all  fire  engines  or  other  implements  used  for  the  extinguishment 
of  fires,  with  the  buildings  used  exclusively  for  the  safe  keeping  thereof, 
and  the  lot  of  reasonable  size  on  which  the  building  is  located,  when  be- 
longing to  any  city,  village  or  town ;  ninth,  all  market  houses,  public 
squares  or  other  public  grounds  used  exclusively  for  public  purposes ;  all 
works,  machinery,  and  fixtures  belonging  exclusively  to  any  town,  village 
or  city,  used  exclusively  for  conveying  water  to  such  town,  village  or  city ; 
all  works,  machinery  and  fixtures  of  drainage  districts,  when  used  ex- 
clusively for  pumping  water  from  the  ditches  and  drains  of  such  district 
for  drainage  purposes  ;^*  tenth,  all  property  which  may  be  used  exclusively 
by  societies  for  agricultural,  horticultural,  mechanical  and  philosophical 
purposes,  and  not  for  pecuniary  profit. 

In  1905  the  following  section  was  added,^^  but  the 
exemption  was  declared  unconstitutional  :^° 

time  to  church  work  were  exempted  (L.  1905,  p.  357)  but  the  act  was 
declared  unconstitutional.  Consolidated  Coal  Co.  v.  Miller,  2^6  III.  14Q 
(1908).  An  amendment  to  the  general  incorporation  law  in  1889  restricted 
the  amount  of  land  a  religious  corporation  could  acquire  to  twenty  acres, 
only  ten  of  which  were  to  be  exempt  from  taxation.    L.  1889,  p.  94. 

Trust  funds,  the  incomes  from  which  were  devoted  to  cemetery  im- 
provement, ornamentation,  etc.,  were  exempted  in  1889.  Ibid.,  p.  63.  By 
a  law  passed  in  1895,  cemetery  associations  were  restricted  in  their  acqui- 
sition of  land  to  an  amount  necessary  for  burial  purposes.  L.  1895,  p.  81. 
A  law  passed  in  1903  provided  that  cemetery  associations  to  be  exempt 
must  pay  no  dividends.    L.  1903,  p.  90. 

i^The  wording  of  this  section  was  slightly  changed  in  1909.  L.  1909, 
p.  309.  The  statement  of  the  exemption  of  library  property  was  amplified 
in  1891.    L.  1891,  p.  157. 

i*The  addition  of  the  property  of  drainage  districts  was  made  in  1913. 

^.  1913,  P-  511- 

"L.  1905,  p.  357. 

^'Supreme  Lodge  v.  Board  of  Review,  223  III.  54  (igo6). 


131]  TAXABLE  PROPEETY  AND  ITS  ASSESSMENT  131 

eleventh,  all  the  money  collected  and  on  hand  within  this  state  of  every 
kind  and  nature  of  fraternal  beneficial  societies  and  the  subordinate  lodges 
thereof  which  are  organized  and  exist  or  admitted  to  do  business  under 
the  laws  of  the  State  of  Illinois,  and  used  exclusively  for  the  purposes  of 
such  societies,  and  not  for  pecuniary  profit. 

Unsuccessful  also  have  been  the  repeated  attempts  to 
secure  the  exemption  of  the  stock  and  notes  of  mutual 
building,  loan  and  homestead  associations.  In  1887^^  it 
was  declared  by  statute  that  since  all  money  paid  to  such 
corporations  was  at  ome  loaned  and  placed  into  taxable 
property,  the  shares  of  stock  and  notes  "being  simply  evi- 
dence as  to  where  such  money  has  been  placed,  therefore 
such  stock  and  notes  shall  not  be  subject  to  taxation."  The 
courts  declared  the  exemption  unconstitutional.^*  In  1895 
the  legislature  made  the  stock  taxable  but  allowed  a  deduc- 
tion for  real  estate  owned  by  the  corporation.  In  1901  an- 
other attempt  was  made  to  exempt  the  stock.  "No  stock 
of  such  association,"  the  new  proviso  read,  "while  pledged 
upon  by,  and  pledged  as  security  to  the  association  assum- 
ing it,  to  an-  amount  equal  to  the  par  value  of  such  stock, 
shall  be  subject  to  assessment."  But  when  this  law  was 
tested  in  the  courts  it  also  was  declared  to  be  contrary  to 
the  constitution." 

The  Illinois  revenue  law,  then,  defines  taxable  prop- 
erty in  the  most  inclusive  fashion.  Property  of  every 
description  is  included  within  its  scope.  Only  the  most 
meagre  exemptions  are  allowed  by  the  constitution  and, 
moreover,  the  courts  construe  the  constitutional  exemp- 
tions in  the  strictest  manner. 


i^L.  1887,  p.  131 ;  the  same  provision  is  included  in  the  law  of  1891. 
L.  1891,  p.  89. 

^*Loan  and  Homestead  Association  v.  Keith,  153  III.  609  (1894). 

^'/n  re  St.  Louis  Loan  and  Investment  Co.  194  III.  609  (1902).  A 
law  of  1872  exempted  members  of  fire  companies  from  the  road  tax  and 
a  law  of  1895  provided  that  no  taxes  should  be  levied  on  teachers*  pension 
fimds.    L.  1871-72,  p.  455;  L.  1895,  p.  312. 


132  HISTORY  OF  TAXATION  IN  ILLINOIS  [132 

ASSESSMENT    METHODS. 

State  and  Local  Officials. 

Although,  under  the  system  in  vogue,  the  greater  part 
of  the  burden  of  assessing  property  falls  upon  the  local 
authorities,  a  certain  share  of  the  responsibility  is  assumed 
by  the  state.  To  the  local  assessors  is  assigned  the  task 
of  listing  land,  lots,  improvements  and  personal  property, 
both  tangible  and  intangible;  but  in  a  few  cases  where, 
because  of  their  limited  jurisdiction  and  for  other  reasons, 
the  local  assessors  have  proved  particularly  inefficient, 
they  have  been  relieved  of  the  task  of  attempting  to  fix 
assessment  values,  and  this  function  has  been  assigned  to 
the  state  board  of  equalization.  Thus,  the  assessment  of 
"corporate  excess"  of  corporations  and  the  assessment  of 
most  railway  property  is  made  by  this  central  authority. 
The  assessment  methods  of  the  state  board  of  equaliza- 
tion are  considered  in  the  treatment  of  railroad  and  cor- 
poration taxation  and  the  local  assessment  receives  de- 
tailed consideration  where  the  topics  of  real  estate  and 
personal  property  assessment  are  discussed.^*^  But  before 
these  special  topics  are  taken  up,  the  machinery  of  local 
assessment  which  is  used  indiscriminately  in  both  the  real 
estate  and  the  personal  property  assessments  will  be 
sketched  in  general  outline. 

When  counties  are  organized  by  the  township  system, 
the  township  is  the  unit  for  assessment  purposes;  where 
there  are  no  townships,  the  county  is  utilized.  The  only 
exception  is  Cook  County,  where  since  1898,  in  spite  of  its 
township  organization,  a  special  method  has  been  used.^^ 
The  officials  of  these  local  units  assess  the  great  bulk  of  the 
property  which  forms  the  base  on  which  state  taxes  are 
levied,  with  the  scantiest  sort  of  supervision  on  the  part 
of  any  central  authority.  The  state  auditor  is  required  to 
prepare  forms  which  are  sent  to  the  local  officers,  and 
gives  his  opinion  and  advice  when  asked  to  do  so.^^    But 

^^Jnfra,  pp.  138  et  scq.,  166  et  seq.,  200  et  seq. 

21L.  1898,  p.  27.    This  phase  of  the  law  was  sustained  by  the  supreme 
court.    The  People  v.  Comrs.  of  Cook  County,  176  III.  576  (1898). 
«2L.  1871-72,  p.  64. 


133]  TAXABLE  PROPERTY  AND  ITS  ASSESSMENT  133 

this  constitutes  the  sum  total  of  the  state's  interference 
with  local  officials.  Effective  oversight  and  criticism,  such 
as  is  now  provided  in  a  number  of  states,  is  here  entirely 
absent. 

Valuatioti  of  Property. 

From  1872  to  1893  the  statutes  prescribed  that  all 
property  should  be  assessed  at  its  fair  cash  value.^^  In 
1898  the  legislature  recognized  the  existing  undervalua- 
tion by  declaring  that  the  assessed  valuation  for  the  pur- 
poses of  taxation  and  limitation  of  indebtedness  should  be 
one-fifth  of  the  full  value.^*  Two  columns  were  to  be  pro- 
vided in  the  assessment  books;  one  was  to  be  headed  "full 
value,"  and  one-fifth  of  the  amount  appearing  here  was  to 
be  set  down  in  the  second  column  marked  "assessed  valua- 
tion." In  1909  this  fraction  was  raised  to  one-third.^^ 
Theoretically,  this  scheme  for  distinguishing  between  the 
real  and  the  assessed  valuations  has  nothing  to  recommend 
it.  As  has  been  pointed  out  by  one  critic,  it  was  invented 
by  some  "legislator,  who  argued  that  the  tax  payers  would 
be  more  willing  to  make  honest  schedules  if  they  could  be 
fooled  into  the  idea  that  they  were  paying  taxes  on  only 
one-fifth  of  their  property."  Strange  as  it  may  seem,  the 
local  assessors  do  find  the  scheme  of  some  practical  value 
in  that  they  can  often  persuade  a  man  to  raise  the  valua- 
tion on  his  property  by  explaining  that  he  will  be  taxed 
on  only  one-third  of  what  he  declares  anyway !  Indeed  the 
law  itself  seems  to  be  drawn  with  the  idea  of  deceiving  the 
property  owner  by  making  him  believe  that  in  some  man- 
ner this  legalized  undervaluation  will  result  in  lower 
taxes.  Thus  the  explanatory  notice  which  is  printed  on 
every  schedule  of  personal  property  reads:  "You  are  to 
give  a  full,  fair  cash  value  of  the  articles  mentioned  as 
well  as  the  amount  of  money  required  to  be  returned.  Only 
one-fifth  of  the  several  amounts  ^'ill  be  taken  and  assessed 

23/&«/.,   pp.   2,   3. 

2*L.  1898,  p.  36. 

25L.  1909,  p.  308  et  seq. 


134  HISTORY  OF  TAXATION  IN  ILLINOIS  [134 

for  the  purpose  of  taxation."^^  The  high  tax  rate  necessi- 
tated by  this  legal  undervaluation  is  often  misunderstood 
by  persons  unfamiliar  with  the  situation  and  in  number- 
less cases  has  doubtless  worked  to  the  disadvantage  of  the 
state. 

Local  Assessors. 

In  counties  with  townships,  each  township  elects 
its  own  assessor.^'^  Under  the  law  of  1872  there  was  one 
assessor  for  each  township.  From  1894  to  1898  those 
townships  which  desired  it  and  had  a  population  of  from 
40,000  to  100,000  could  have  a  board  of  three  assessors  in 
place  of  a  single  assessor,  but  this  arrangement  was  dis- 
carded in  1898.^^  Since  1898  a  county  supervisor  has  been 
provided,  in  the  person  of  the  county  treasurer  ex  officio^ 
whose  function  is  to  oversee  the  work  of  the  township  asses- 
sors.^* He  assembles  all  the  assessors  annually  for  consul- 
tation and  instructions  as  to  the  methods  of  assessment  to 
be  followed. 

In  the  counties  which  are  not  organized  under  the 
township  system,  the  county  treasurer  acts  as  county  as- 
sessor,^*^  and  appoints  deputy  assessors.^^  For  a  short 
time  the  county  assessor  was  appointed  by  the  county 
board  under  the  law  of  1872  which  stated  that  some  person 
should  be  thus  appointed  to  act  as  assessor  until  provision 
should  be  made  by  the  legislature  for  the  election  of  an 
assessor.^^  An  act  passed  in  1873  brought  about  the  pres- 
ent state  of  affairs  where  the  county  treasurer  acts  as 
assessor.^^ 

2«L.  1898,  p.  36. 

^'^In  townships  included  within  cities  the  city  clerk  acts  as  township 
assessor.    L.  1901,  p.  314. 

28L.  1893,  p.  73;  L.  189s,  p.  317;  L.  1898,  p.  26. 

^^Ibid.,  p.  36;  L.  1903,  p.  295. 

8°L.  1898,  p.  36;  L.  1903,  p.  299. 

8^L.  1871-72,  p.  20.  The  provision  of  the  act  of  1898  which  specifically 
allows  county  assessors  to  district  their  counties  and  appoint  assessors 
was  repealed  in  1903.    L.  1898,  p.  96;  L.  1903,  p.  295. 

«2L.  1871-72,  p.  20. 

^^Revised  Statutes,  1874,  p.  455. 


135]  TAXABLE  PROPERTY  AND  ITS  ASSESSMENT  135 

The  change  in  the  manner  of  selecting  assessment 
officials  in  Cook  County  came  in  1898.  The  experience  of 
electing  assessors  of  townships  had  proved  very  unsatis- 
factory. Inefficiency  was  evident  upon  the  face  of  the  re- 
turns and  corruption  was  freely  charged.^*  It  was  in  an 
attempt  to  remedy  this  condition  that  Cook  County  was 
made  an  exception  and  given  different  assessment  officials 
from  those  of  other  counties  organized  by  townships.  The 
general  supervision  of  the  assessment  is  now  entrusted  to 
a  board  of  five  persons,  one  or  two  elected  every  second 
year  for  a  term  of  six  years.  This  board  appoints  deputy 
assessors  for  all  townships  in  the  county  except  those 
which  lie,  in  part  at  least,  outside  of  Chicago.^^ 

The  Cook  County  board  of  assessment  is  to  a  great 
extent  subject  to  the  supervision  of  the  county  board  of 
review,  consisting  of  three  elected  members.  Thus  the 
board  of  review  must  approve  the  compensation  of  assess- 
ors, the  amount  and  the  compensation  of  clerical  help 
employed  by  the  assessment  board,  as  well  as  all  appoint- 
ments of  deputy  assessors.^® 

The  general  system  of  township  assessors  was  sliarplj 
attacked  in  the  report  of  the  revenue  commission  of  1886.^^ 
The  abolition  of  the  system  and  the  substitution  of  a 
county  assessor  elected  for  four  years,  with  power  to  ap- 
point deputies,  was  one  of  the  commission's  recommenda- 
tions but  it  suffered  the  common  fate  of  all  the  reform 
suggestions. 

The  compensation  of  the  assessors  varies  with  the  size 
of  the  county.  Since  1898  limits  have  been  fixed  in  the 
statutes.^^  All  assessors  are  bonded  to  a  minimum  of 
|2,000  in  Cook  and  to  a  maximum  of  |500  in  other  coun- 
ties, and  each  assessor  must  have  two  or  more  "sufficient 
sureties." 

3*S.  E.  Sparling,  Municipal  History  of  Chicago  (Madison,  Wis., 
1898),  p.  106;  Chicago  Tribune,  Feb.  25,  ,1898;  R.  H.  Whitten,  "The  As- 
sessment of  Taxes  in  Chicago,"  Jo.  Pol.  Econ.,  V,  175. 

35L.  1898,  p.  36;  L.  1899,  p.  335;  L.  1913,  p.  509  et  seq. 

3eL.  1899,  p.  335. 

^''Report  of  Revenue  Commission,  1886,  pp.  vi,  vii. 

38L.  1898,  p.  295;  L.  1903,  p.  299. 


136  HISTORY  OF  TAXATION  IN  ILLINOIS  [136 

Township  assessors  were  formerly  elected  annually 
but  in  1909  their  term  was  lengthened  to  two  years.^®  In 
counties  without  townships  the  term  of  the  county  treas- 
urer, who  is  also  the  county  assessor,  was  made  two  years 
by  the  law  of  1873,^^  but  this  was  changed  to  four  years  in 
1881.^1 

The  revenue  law  of  1872  required  that  all  assessors 
take  the  regular  oath  prescribed  for  state  officers  by  the 
constitution.^^  But  the  law  of  1898  went  further  and  pro- 
vided the  following  special  oath  for  assessors : 

I  do  solemnly  swear  (or  affirm)  that  I  will  support  the  constitution 
of  the  United  States  and  the  constitution  of  the  State  of  Illinois,  and 
that  I  will  faithfully  discharge  all  the  duties  of  the  office  of  assessor, 
deputy  assessor,  or  supervisor  of  assessments  (as  the  case  may  be),  to  the 
best  of  my  ability ;  that  I  will  without  fear  or  favor  appraise  all  the 
property  in  said  county  at  its  fair  cash  value,  said  value  to  be  ascer- 
tained at  what  the  property  would  bring  at  a  voluntary  sale  in  the  due 
course  of  business  and  trade;  and  that  I  will  assess  said  property  when 
so  appraised  at  one-fifth*^  of  its  said  cash  value;  that  I  will  cause  every 
person,  company,  or  corporation  assessed  to  sign  his,  her,  or  its  assess- 
ment schedule,  and  I  will  administer  to  each  and  every  person  so  signing 
said  assessment  schedule  the  oath  thereon,  and  return  said  schedule  so 
signed  and  file  the  same  with  the  county  clerk.** 

Special  penalties  were  provided  in  1898  for  tax  offi- 
cials who  failed  to  do  their  full  duty.  Threats  to  apply 
these  penalties  have  been  used  to  good  effect  as  a  club  over 
the  heads  of  'negligent  officials.*^  Guilty  assessors,  as  well 
as  other  tax  officers,  may  be  fined  for  each  offense  from 
|100  to  15000  and  imprisoned  in  the  county  jail  for  one 
year.  They  are  also  liable  upon  their  bonds  for  damages 
in  case  the  interests  of  any  one  have  been  injured  by  the 
misconduct.'*^ 


39L.  1898,  p.  36;  L.  1909,  p.  470. 

^'^Rev.  Stat.  1874,  p.  455. 

*iL.  1881,  p.  62. 

*2L.  1871-72,  p.  20. 

*30ne-third  by  amendment  of  1909,  L.  1909,  p.  308  et  seq. 

**L.  1898,  p.  36. 

^'Notably  in  the  Chicago  Teachers'  Federation  case. 

**L.  1898,  p.  36. 


137]  TAXABLE  PROPERTY  AND  ITS  ASSESSMENT  137 

Return  of  Assessment  Lists. 

The  manner  in  which  the  local  assessors  proceed  to  do 
the  actual  work  of  listing  property  for  taxation  and  how 
the  assessments  are  equalized  are  considered  in  detail  in 
another  place.^'  Suffice  it  to  say  that  after  this  part  of  the 
work  is  completed/*  the  assessors  sum  up  their  books  and 
prepare  statements  of  thv^  detailed  assessments  contained 
therein.  After  they  have  verified  their  assessment  books 
by  an  affidavit,  all  the  documents  are  turned  over  to  the- 
county  clerk,  passing,  on  the  wa^^  through  the  hands  of 
the  county  treasurer  as  county  assessor  or  as  supervisor 
of  assessments.^^ 

Before  1898  township  assessments  were  subject  to  re- 
view by  a  town  board.  At  present  Cook  County  has  a  re- 
view by  the  county  board  of  assessors  before  the  formal 
review  by  the  county  board  of  review.  In  other  counties 
the  assessment  receives  its  first  review  by  the  county  board 
of  review. 

The  county  clerk  makes  an  abstract  of  the  county 
assessment  and  forwards  it  to  the  auditor  for  the  use  of 
the  state  board  of  equalization.^^ 

Puhlication  of  Assessments. 

In  1898,  in  the  vain  hope  that  publicity  would  prevent 
undervaluation,  the  law  was  so  changed  as  to  require  the 
publication  of  the  assessment  lists.  Newspapers  were  to 
be  used  for  this  purpose  in  all  counties  except  Cook  where 
pamphlets  were  to  be  printed  and  sent  to  all  taxpayers.'^' 
In  all  counties  except  Cook,  the  assessment  is  published  ha 
soon  as  made,  before  review.  Here  the  real  estate  assess- 
ment is  not  published  until  the  changes  made  by  the  board 
of  review  can  be  included.^^ 

*'^Infra,  pp.  141  et  seq.,   166  et  seq.,   173  et  seq. 

**This  must  be  done  before  June  10;  previous  to  1898,  before  July  10. 
*»L.  1871-72,  p.  23;  L.   1879,  p.  244;  L.,  1881,  p.  134;  L.   1898,  p.  36. 
«oL.  1871-72,  pp.  23,  26;  L.   1873-74,  p.  57;  L-   1879,  p.  244;  L.   i88i,  p. 
134;  L.   1898,  p.  36. 
'^^Ibid.,  p.  45. 
"L.  1905,  p.  361 ;  L.   1907,  p.  499. 


CHAPTER    VIII. 

The  Assessment  of  Personal  Property, 
the  process  of  assessment. 

Definitions  and  Deductions. 

Although  the  law  clearly  defines  real  estate,  it  gives 
no  formal  definition  of  personal  property.  It  is  evident 
from  the  description  of  real  estate  that  land,  "buildings, 
structures,  and  improvements,  and  permanent  fixtures" 
are  not  considered  personal  property.^  Moreover  several 
types  of  property  are  specifically  designated  in  the  law 
as  personal  property;  among  these  are  money  secured  by 
deed,  nursery-stock,  franchises,  accrued  interest  on  ex- 
empted stocks  and  bonds,  a  purchaser's  interest  in  ex- 
empted lands,  gas  mains  and  pipes,  street  railway  tracks 
and  roads  and  bridges  owned  by  private  companies.^  The 
capital  stock  of  corporations  is  also  considered  personal 
property  under  the  revenue  law.  However  the  stock  of 
corporations  organized  under  the  laws  of  Illinois,  with 
certain  exceptions,  is  assessed  by  the  state  board  of 
equalization  and  this  topic  is  treated  elsewhere.  The  local 
assessor  is  supposed  to  list  as  personal  property  the  value 
of  the  capital  stock  of  the  excepted  corporations,  e.  g. 
"those  organized  for  purely  manufacturing  and  mercantile 
purposes  or  for  either  of  such  purposes,  or  for  the  mining 
or  sale  of  coal,  or  for  printing,  or  for  the  publishing  of 
newspapers,  or  for  the  improving  or  breeding  of  stock. "^ 

A  more  distinct  conception  of  what  the  assessors  at- 
tempt to  list  as  personal  property  may  be  gained  by  read- 
ing the  items  in  the  schedule  which  must  be  filled  out  by 
every  property  owner.     Under  these  thirty-six  items  fall 

iL,  1871-72,  p.  68. 

2/6trf.,  pp.  5,  6,  II. 

^Ibid.,  p.  2;  L.  1905,  p.  353. 

138 


139]  THE  ASSESSMENT  OF  PERSONAL  PROPERTY  139 

all  possible  varieties  of  property,  except  those  described 
as  real  estate.    The  schedule  is  as  follows : 

First,  the  number  of  horses  of  all  ages,  and  the  value  thereof;  sec- 
ond, the  number  of  cattle  of  all  ages,  and  the  value  thereof ;  third,  the 
number  of  mules  and  asses  of  all  ages,  and  the  value  thereof;  fourth,  the 
number  of  sheep  of  all  ages,  and  the  value  thereof ;  fifth,  the  number  of 
hogs  of  all  ages,  and  the  value  thereof;  sixth,  every  steam  engine,  in- 
cluding boilers,  and  the  value  thereof ;  seventh,  every  fire  or  burglar-proof 
safe,  and  the  value  thereof ;  eighth,  every  billiard,  pigeon-hole,  bagatelle, 
or  other  similar  tables,  and  the  value  thereof ;  ninth,  every  carriage  and 
wagon,  of  whatsoever  kind,  and  the  value  thereof ;  tenth,  every  watch 
and  clock,  and  the  value  thereof;  eleventh,  every  sewing  or  knitting  ma- 
chine, and  the  value  thereof;  twelfth,  every  pianoforte,  and  the  value 
thereof ;  thirteenth,  every  melodeon  and  organ,  and  the  value  thereof ; 
fourteenth,  every  franchise,  the  description  and  the  value  thereof ;  fif- 
teenth, every  annuity  and  royalty,  the  description  and  the  value  thereof ; 
sixteenth,  every  patent  right,  the  description  and  value  thereof ;  seven- 
teenth, every  steamboat,  sailing  vessel,  wharf  boat,  barge  or  other  water 
craft,  and  the  value  thereof ;  eighteenth,  the  value  of  merchandise  on 
hand ;  nineteenth,  the  value  of  material  and  manufactured  articles  on 
hand ;  twentieth,  the  value  of  manufacturer's  tools,  implements  and  ma- 
chinery (other  than  boilers  and  engines,  which  shall  be  listed  as  such)  ; 
twenty-first,  the  value  of  agricultural  tools,  implements  and  machinery; 
twenty-second,  the  value  of  gold  or  silver  plate  and  plated  ware;  twenty- 
third,  the  value  of  diamonds  and  jewelry;  twenty-fourth,  the  amount  of 
moneys  of  bank,  banker,  broker,  or  stock-jobber;  twenty-fifth,  the  amounts 
of  credits  of  bank,  banker,  broker,  or  stock-jobber;  twenty-sixth,  the 
amount  of  moneys  of  other  than  bank,  banker,  broker,  or  stock-jobber; 
twenty-seventh,  the  amount  of  credits  of  other  than  bank,  banker,  broker, 
or  stock-jobber;  twenty-eighth,  the  amount  and  value  of  bonds  and 
stocks ;  twenty-ninth,  the  amount  and  value  of  shares  of  capital  stock 
of  companies  and  associations  not  incorporated  by  the  laws  of  this  state; 
thirtieth,  the  value  of  property  such  person  is  required  to  list  as  a  pawn- 
broker; thirty-first,  the  value  of  property  of  companies  and  corporations 
other  than  propertj'  hereinbefore  enumerated ;  thirty-second,  the  value  of 
bridge  property ;  thirty-third,  the  value  of  property  of  saloons,  and  eating 
houses;  thirty-fourth,  the  value  of  household  or  office  furniture  and 
property;  thirty-fifth,  the  value  of  investments  in  real  estate  and  improve- 
ments thereon  required  to  be  listed  under  this  Act;  thirty-sixth,  the  value 
of  all  other  property  required  to  be  listed.* 

Several  of  the  items  of  this  schedule  need  explanation 
before  they  become  intelligible.    Credits  are  defined  in  the 


*L.  1871-72,  pp.  7,  8. 


140  HISTORY  OF  TAXATION  IN  ILLINOIS  [140 

law  as  "every  claim  or  demand  for  money,  labor,  interest, 
or  other  valuable  things,  due  or  to  become  due,  not  in- 
cluding money  on  deposit"^  But  Credits  of  hank,  hanker 
etc.  are  by  no  means  coordinate  with  Credits  of  other  than 
hank,  hanker  etc.  Bankers'  credits  are  arrived  at  by  the 
following  method :  from  "the  amount  of  checks  or  other 
cash  items"  (excluding  money  on  hand  or  in  transit  and 
funds  in  the  hands  of  others  subject  to  draft)  and  "the 
amount  of  bills  receivable,  discounted  or  purchased,  and 
other  credits  due  or  to  become  due,  including  amounts 
receivable  and  interest  paid  and  unpaid,"  is  subtracted 
"the  amount  of  all  deposits  made  with  them  by  other 
parties"  and  "the  amount  of  all  accounts  payable  other 
than  current  deposit  accounts."*^  Formerly  the  "amount 
of  checks  and  other  cash  items"  was  taxed  as  moneys 
and  was  therefore  not  subject  to  deduction/ 

The  item  of  Credits  of  other  than  hank,  hanker  etc., 
is  not  the  sum  total  of  all  the  valuable  claims  of  the  tax- 
payers who  are  not  in  the  banking  business,  for  before  a 
property  owner  sets  down  the  amount  of  his  credits,  he  is 
permitted  to  make  certain  deductions  for  debt. 

The  deductions  allowed  appear  to  be  more  substantial 
than  they  really  are.  In  the  first  place  deductions  for  debts 
can  be  made  only  from  credits.^  Debts  can  not  be  used  to 
offset  any  other  property  on  the  assessment  roll.  Unless  a 
man  owns  something  which  falls  under  the  technical  defini- 
tion of  a  credit,  he  may  be  utterly  bankrupt  with  debts  and 
yet  unable  to  secure  a  deduction  from  his  assessment. 
Moreover,  not  all  debts  are  considered  valid  for  deduction 
purposes;  the  law  specifies  that  no  deduction  shall  be  al- 
lowed on  account  of  any  obligations  to  insurance  com- 
panies on  premiums  or  policies,  unpaid  subscriptions  to  re- 
ligious, charitable,  and  other  societies,  or  unpaid  install- 
ments on  the  capital  stock  of  any  corporation.  Finally, 
not  all  credits,  even,  may  be  offset  by  debts ;  it  is  provided 

5  Ibid.,  p.  68. 

'Ibid.,  p.  lo;  L.  1903,  p.  294. 

'L.  1871-72,  p.  9. 

*Ibid.,  pp.  8,  9. 


141]  THE  ASSESSMENT  OF  PERSONAL  PROPERTY  141 

that  no  deduction  shall  be  allowed  from  the  amount  of  any 
bonds,  stocks,  or  money  loaned.  Thus,  after  all  the  condi- 
tions have  been  met,  little  of  importance  except  book-ac- 
counts for  goods  sold  are  legally  subject  to  deduction  for 
debt. 

No  one  can  find  a  theoretical  justification  for  the 
policy  pursued  in  Illinois  In  the  deduction  of  debts.  For 
example,  money  due  in  payment  for  a  loan  is  a  credit  not 
subject  to  deduction.  Money  due  in  payment  for  goods  sold 
is  a  credit  also,  but  is  subject  to  deduction.  Such  distinc- 
tions must  base  whatever  justifications  they  may  have  on 
the  ground  of  expediency.  It  is  interesting  to  note  that 
local  tax  officials  say  that  these  distinctions  are  not  always 
observed  in  actual  practice.  Thus  notes  held  in  part  pay- 
ment for  land  are  many  times  declared  not  subject  to  de- 
duction for  debts. 

Moneys  of  hank,  hanker  etc.  are  described  as  "the 
amount  of  money  on  hand  or  in  transit,"  and  "the  amount 
of  funds  in  the  hands  of  other  banks,  bankers,  brokers,  or 
others,  subject  to  draft."^  Moreover,  the  figures  appearing 
under  the  Bank,  hanker  etc.  items  do  not  include  the  prop- 
erty of  the  state  and  national  banks  which  are  taxed  in  a 
different  manner.  ^^  The  other  items  of  the  schedule  of 
personal  property  need  no  explanation. 

Manner  of  Listing. 

Every  person  in  the  state  is  called  upon  annually  to 
list  his  personal  property.^  ^  When  intangible  personal 
property  is  to  be  assessed,  self-assessment  seems  almost  in- 
evitable. The  only  type  of  personal  property  which  the 
assessor  attempts  to  reach  without  the  aid  of  a  confession 
by  the  individual  property  owner,  is  the  stock  of  the  state 
and  national  banks.  A  particularly  archaic  provision  to 
continue  upon  the  statutes  of  a  woman  suffrage  state  is 
that  which  provides  that  the  property  of  a  wife  shall  be 
listed  "by  her  husband,  if  in  sound  mind ;  if  not,  by  herself." 

»C/.  supra,  pp.  128-129. 
^^Infra,  p.  212. 
"L.  1871-72,  p.  3. 


142  HISTORY  OP  TAXATION  IN  ILLINOIS  [142 

Since  1898,  property  has  been  listed  in  April  and  May, 
with  reference  to  the  amount  owned  on  April  first.^* 
Formerly  the  assessments  had  been  made  one  month  later> 
during  May  and  June.^^ 

The  general  rule  that  personal  property  is  listed  where 
the  owner  resides  is  not  adhered  to  in  all  cases.^*  Thus 
the  capital  stock  and  franchises  of  corporations  are  taxed 
where  the  principal  office  is  located;  in  case  the  owner 
of  live  stock  or  other  personal  property  connected  with  a 
farm  does  not  reside  on  it,  such  property  is  listed  where 
the  farm  lies  rather  than  where  the  owner  lives;  a  pur- 
chaser's interest  in  exempted  lands  is  taxed  where  the 
lands  are  situated;  water  craft  are  taxed  where  licensed; 
property  of  companies  such  as  banks,  bankers,  brokers, 
stock-jobbers,  etc.,  is  assessed  where  their  business  is  car- 
ried on;^^  Illinois  life  insurance  companies  are  taxed 
where,  according  to  the  articles  of  incorporation,  their  prin- 
cipal office  is  located,  unless  another  place  has  been  chos- 
en ;^^  gas  mains  and  pipes,  street  railway  tracks,  roads  and 
bridges  are  taxed  where  laid  or  located;  the  property  of 
stage,  express,  or  transportation  companies  is  taxed  where 
usually  kept. 

To  secure  the  listing  of  personal  property  the  law  pro- 
vides that  the  assessor  call  upon  each  resident  of  the 
state  during  the  assessment  period,  and  require  him  to 
fill  out  and  sign  an  itemized  schedule.^  "^  In  case  of  sick- 
ness or  absence  at  the  time  of  the  call,  a  blank  is  left  which 
is  to  be  filled  out  and  returned  to  the  assessor.  If,  for  any 
reason,  a  person  fails  to  fill  out  this  schedule,  he  must 
submit  to  taxation  on  the  basis  of  a  statement  made  out  by 
the  asessor  according  to  his  best  judgment  and  inform- 
ation.^® 

"L.  1898,  p.  36. 
^^L.  1871-72,  p.  3. 
^*Ibid.,  pp.  4,  5,  6. 
"L.  1905,  p.  356. 

^''L.  1871-72,  pp.  2,  21.    For  this  schedule  see  supra,  p.  139. 
^^Ibid.,  p.  22. 


143]  THE  ASSESSMENT  OP  PERSONAL  PROPERTY  143 

Oaths  and  Penalties. 

Before  1879  the  law  permitted,  and  since  1879  it  has 
required  that  the  assessor  administer  an  oath  to  every 
person  making  out  a  schedule.^®  He  may  also  examine 
under  oath  any  person  whom  he  may  suppose  to  have 
knowledge  of  the  personal  property  of  any  one  who  refuses 
to  fill  out  his  schedule.^^  i'inally,  a  special  oath  is  pre- 
scribed in  cases  where  debts  are  presented  to  counterbal- 
ance credits.^^ 

The  assessor  is  supported  by  elaborate  penalties  in  his 
task  of  securing  the  listing  of  personal  property.  Since 
1879,  it  has  been  the  law  that  fifty  per  cent  shall  be  added 
to  the  assessor's  estimate  of  the  property  of  the  person  who 
refuses  to  make  out  a  schedule.^^  Moreover,  refusal  to 
schedule  such  property  was  made  a  misdemeanor  punish- 
able by  fine.  If  a  person  swears  falsely  he  is  to  be  prose- 
cuted for  perjury .^^  In  case  property  is  discovered  which 
has  been  escaping  taxation  in  the  past,  back  taxes  with  ten 
per  cent  interest  are  to  be  collected.^*  By  the  law  of  1898 
the  person  who  turns  in  a  false  or  fraudulent  statement 
with  the  intention  of  defeating  or  evading  the  law  renders 
himself  liable  to  the  heavy  punishment  of  a  fine  of  $5,000 
and  imprisonment  for  one  year.-^  As  a  spur  to  the  zeal 
of  the  state's  attorney  in  prosecuting  such  cases,  a  special 


i9/6td.,  p.  8;  L.  1879,  p.  252. 

20L.  1871-72,  p.  21. 

^^  I  bid.,  p.  9. 

22L.  1879,  p.  252;  L.  1898,  p.  36. 

23L.  1871-72,  p.  8. 

^*Ibid.,  pp.  64,  65.  The  force  of  this  section  was  partly  overcome  by 
a  decision  of  the  supreme  court  in  1885.  Allwood  v.  Cowen  et  al.  ill 
III.  481  (1885).  It  was  held  that  in  the  case  of  credits,  the  assessor  as- 
sumed a  judicial  position  and  that,  therefore,  his  act  could  not  be  re- 
viewed by  another  assessor  in  after  years.  But  actually  this  judicial 
activity  is  only  a  simple  arithmetical  calculation.  Every  person  who 
desires  a  deduction  for  debt  must  list  both  his  debts  and  credits;  the 
assessor  merely  subtracts  the  one  from  the  other.  Cf.  The  People  v. 
Sellars,  179  III.  170  (1899). 

25L.  1898,  p.  51.  By  a  law  of  1872  a  lighter  penalty  was  provided. 
L.  1871-72,  p.  17, 


144  HISTORY  OF  TAXATION  IN  ILLINOIS  [144 

fee  of  twenty  dollars  for  each  conviction  together  with 
ten  per  cent  of  all  fines  collected  was  allowed.  Moreover, 
the  board  of  review^^  has  power  to  call  witnesses,  assessors 
or  others,  and  to  inquire  of  them  as  to  the  correctness  of 
valuations.  Special  punishment  of  fine  and  imprisonment 
is  provided  for  the  assessor  who  breaks  his  pledge  to  assess 
all  property  according  to  the  law,  to  compel  every  person 
to  sign  and  swear  to  his  schedule,  and  for  the  assessor 
who  omits  to  list  property  or  undervalues  it.^"^  A  fine 
is  prescribed  also  in  cases  where  fraudulent  statements  of 
deductions  are  made.^^ 

Surely  it  would  be  unreasonable  to  ask  for  more  strin- 
gent regulations  governing  the  listing  of  personal  property 
than  those  provided  in  the  code.  Ample  powers  seem  to  be 
given  the  assessors  to  compel  the  property  owners  to  de- 
clare their  taxable  goods.  Oaths,  fines,  penalties,  and 
powers  of  inquisition  are  supplied  him ;  and  if  the  assess- 
ment is  not  full  and  fair  it  would  seem  not  to  be  the  fault 
of  the  legislators  who  have  provided  the  authority  to  the 
local  administrative  officers.  A  brief  study  of  the  revenue 
law  is  enough  to  convince  anyone  that  the  fault  of  what- 
ever evil  conditions  may  exist  does  not  rest  there.  Either 
the  system  is  an  impossible  one  or  the  administrative 
officers,  because  of  inefficiency,  negligence,  or  cupidity, 
fail  in  their  duty. 

EFFICIENCY  OF  THE  PERSONAL  PROPERTY  ASSESSMENT. 

In  considering  the  taxation  of  personal  property, 
especially  of  intangible  personal  property,  the  discussion 
necessarily  assumes  a  character  as  complex  as  that  of  the 
famous  Pooh-Bah.  Whether  a  statement  is  true  or  false  de- 
pends entirely  upon  the  point  of  view;  it  makes  all  the 
difference  in  the  world  whether  one  speaks  as  Chancellor 
of  the  Exchequer  or  as  Attorney  General.  It  seemed, 
when  the  question  was  considered  from  the  viewpoint  of 
the  statutes  that  personal  property  was  taxed  in  Illinois, 

2«C/.  infra,  p.  173  et  seq. 
"L.  1898,  p.  39. 
2«L.  1871-72,  p.  9. 


145]  THE  ASSESSMENT  OF  PERSONAL  PROPERTY  145 

for  as  has  been  seen  it  would  be  difficult  to  devise  a  more 
stringent  set  of  penalties,  oaths,  and  instructions  than 
those  prescribed  for  the  taxation  of  such  property  in  the 
present  revenue  law.  But  the  matter  takes  on  a  different 
aspect  when  viewed  by  the  Chancellor  of  the  Exchequer 
and  from  the  amount  of  revtnue  brought  in  the  treasury 
from  the  tax  on  personal  property,  one  would  be  inclined 
to  discount  the  evidence  of  the  statute  book. 

In  taking  up  the  examination  of  the  efficiency  of  the 
law  it  is  interesting  to  recall  that  one  of  the  prime  causes 
of  the  revamping  of  the  revenue  law  in  1872  was  to  secure 
the  listing  of  this  particular  kind  of  property.  When  the 
governor  sent  a  message  to  the  legislature  urging  a  revision 
of  the  revenue  law,  he  enclosed  as  an  argument  a  letter 
from  the  state  auditor  which  said  that  "the  first  necessity 
for  an  immediate  and  radical  change  and  revision"  of  the 
revenue  law  grew  out  of  "the  undeniable  and  admitted 
fact"  that  the  great  mass  of  intangible  personal  property 
escaped  taxation;  |150,000,000  of  such  property,  he  be- 
lieved, escaped  the  assessors  each  year.^^  It  must  be  con- 
ceded that  the  legislature  was  not  backward  in  its  response. 
It  gave  the  state  a  code  which  should  have  succeeded  in 
reaching  personal  property  if  any  code  depending  upon 
self -assessment,  oaths,  and  penalties  could  be  successful. 
But  after  a  trial  of  forty  years  it  is  evident  that  the  at- 
tempt has  been  a  failure. 

In  seeking  to  test  the  efficiency  of  the  assessors,  one 
difficulty  presents  itself  at  the  very  outset  in  that  the 
data  furnished  in  the  auditors'  reports  are  not  well  adapted 
for  the  purpose.  The  assessment  figures  are  not  in  a  form 
easily  comparable  with  the  estimates  of  true  values  ob- 
tainable from  other  sources.  Thus  under  the  item  of 
Credits  of  Banks,  Bankers  etc.  are  given  merely  the  results 
of  deducting  certain  debits  from  certain  credits,  none  of 
the  original  terms  being  supplied.  The  figures  given  under 
Credits  of  other  than  Banks,  Bankers  etc.  are  also  result- 
ants, no  specification  being  made  of  the  fund  subject  to 

2»Reports,  27  G.  A.,  1871,  III,  loi. 


146  HISTORY  OP  TAXATION  IN  ILLINOIS  [146 

deduction  for  debts.  Moreover,  no  distinction  is  drawn 
between  the  various  kinds  of  credits — mortgages,  notes, 
book-accounts  etc.  Moneys  of  other  than  Banks,  Bankers 
etc.  represent  not  only  cash  which  tax  payers  may  have  on 
hand  but  whatever  money  they  may  have  on  deposit  in  the 
various  banks.  It  will  be  readily  seen  that  these  conditions 
make  precise  statements  about  the  efficiency  of  the  assess- 
ment of  intangible  property  very  difficult.  But  as  it  hap- 
pens this  is  not  particularly  important,  as  the  evasion  and 
undervaluation  is  so  gross  as  to  render  precise  statements 
superfluous.  After  making  every  possible  allowance  for 
indeterminate  factors  the  assessment,  as  will  be  shown, 
appears  still  to  be  extremely  inefficient. 


Mortgages  and  Credits. 

It  has  seemed  well  to  examine  in  detail  several  items 
on  the  schedule  of  personal  property  as  test  probes  of 
the  efficiency  of  the  assessment.  As  an  example  of  the 
assessment  of  intangible  personal  property,  the  item  which 
appears  in  the  auditor's  reports  as  Credits  of  other  than 
Bank,  Banker,  Broker,  Stockjobber  has  been  chosen  as  the 
first  to  be  examined.  All  property  owners  except  banks, 
bankers,  brokers  etc.  are  expected  to  list  their  credits 
under  this  head.  Credits  do  not  include  bonds  and  stocks 
and  money  on  deposit ;  they  do  include  all  other  claims  or 
demands  for  anything  of  value  except  in  so  far  as  these 
claims  are  counterbalanced  by  debts.  It  will  be  recalled^** 
that  some  credits,  such  as  those  for  money  loaned,  are 
not  liable  to  deduction  and  some  debts  are  not  available 
for  counterbalancing  credits.  The  amounts  returned  to 
the  state  auditor  under  this  head  should,  then,  include  the 
total  amount  of  all  money  loaned  as  well  as  all  other 
valuable  claims  not  cancelled  by  bona  fide  debts.  Table 
10  gives  the  assessed  value  of  this  class  of  credits  for 
the  years  mentioned. 

^^Supra,  pp.  140-141. 


147]  THE  ASSESSMENT  OF  PERSONAL  PKOPERTY  147 

TABLE  10. 

Assessed  Value  of  Credits,  Not  Including  Bankers'  Credits,  1875-1912. 

Entire  State  Cook  County 

1875  $24,018,237  $    146,124 

1880  , 17,680,302  211,815 

1885  _ 13,102,498  250,239 

1890  11,175,380  190,535 

1895  10,342,774  67,660 

1900 22,181,440  2,819,312 

1905  21,467,724  2,751,212 

1906  _ 22,720,543  3,4^3,790 

1907   25,866,300  5,803,866 

1908   _ 21,418,528  1,357,322 

.  1909   "- 45,464,043  10,852,991 

1910  38,681,356  4,063,277 

1911    37,738,112  4,194,186 

1912  38,561,691  5,090,345 

One  needs  only  to  glance  over  the  amounts  of  credits 
assessed  year  by  year  to  realize  that  undervaluation  or 
evasion  exists  to  a  considerable  degree.  What  other  reason- 
able explanation  can  be  made  when  upon  investigation  one 
discovers  a  drop  from  nearly  thirty-six  millions  in  1873  to 
less  than  eleven  millions  in  1892?  In  1898,  just  before 
the  new  revenue  law  went  into  effect,  the  assessment  of 
credits  was  scarcely  one-third  what  it  had  been  twenty-five 
years  before — and  during  that  time  the  population  of  the 
state  had  nearly  doubled. 

In  1899,  with  the  introduction  of  a  law  which  legal- 
ized undervaluation  by  authorizing  an  assessment  on  the 
basis  of  twenty  per  cent  of  true  value,  but  which  at  the 
same  time  strengthened  the  hands  of  the  assessors,  the 
returns  leaped  from  twelve  millions  to  twenty-six  and  a 
half  million.  Again,  although  the  increase  of  the  figures 
for  1909  over  1908  must  be  ascribed  in  part  to  the  law 
changing  the  valuation  from  the  one-fifth  to  the  one-third 
basis,  this  line  of  explanation  will  not  account  for  the 
increase  in  the  Cook  County  returns  from  a  little  over 
one  million  to  nearly  eleven  millions.  Who  would  stand 
sponsor  for  the  statement  that  in  one  year,  from  1909  to 
1910,  the  credits  in  Cook  County  decreased  in  value  from 


148  HISTORY  OF  TAXATION  IN  ILLINOIS  [148 

eleven  million  to  four  million  dollars?  More  than  one 
hundred  times  as  much  credits  were  taxed  in  1899  as  in 
1895.  After  comparing  the  return  of  eleven  millions  in 
1909  with  the  |67,660  assessed  in  1895,  or  with  the  |80,- 
101  assessed  in  1897,  or  even  with  the  five  millions  assessed 
in  1912,  any  reasonable  mind  will  be  convinced  that  a  great 
many  mortgages  in  Cook  County  escaped  the  assessor's 
net  in  those  years. 

Another  test  of  undervaluation  and  evasion  is  secured 
by  contrasting  the  assessments  of  the  various  counties. 
In  a  state  like  Illinois  it  may  be  safely  assumed  that  at 
least  as  many  credits  are  owned  by  city  people  as  by  those 
who  live  in  the  agricultural  districts.  It  is  probable  that 
the  current  of  borrowed  money  is  even  stronger  from  the 
city  toward  the  country  than  vice  versa.  Such  statistics 
as  are  available  for  Illinois  seem  to  bear  out  this  assump- 
tion.'^ Therefore  Cook  County,  the  city  county  of  the 
state,  should  have  a  per  capita  assessment  of  credits  at 
least  as  large  as  the  agricultural  counties.  But  as  is  dem- 
onstrated by  the  material  presented  in  Table  11,  the 
returns  from  Cook  County  are  unable  to  stand  this  test. 
Indeed  in  only  one  year,  1899,  did  it  bear  its  share  of  the 
burden,  population  being  taken  as  the  test  of  the  amount 
owned  in  the  different  communities.  In  every  other  year 
the  returns  from  Cook  County  show  evidence  of  evasion. 
The  most  startling  figures  are  those  for  1895.'  At  this  time 
Cook  County  contained  one-third  of  the  population  of  the 
state  and  yet  listed  but  one  one-hundred-and  fifty-fourth  of 
the  credits  assessed  for  taxation.  *  The  showing  for  many 
other  years  is  almost  as  poor.  In  1908  about  seventy-five 
cents  worth  of  credits  (|.738)  was  listed  for  each  person  in 
Cook  County,  while  nearly  six  dollars  and  seventy-five  cents 
worth  ($6.72)  was  listed  for  each  person  outside  of  Cook 
County.  In  that  year  Winnebago  County  listed  almost 
as  many  credits  as  Cook  County ;  the  population  of  Winne- 
bago County  is  less  than  fifty  thousand ;  that  of  Chicago 
is  over  two  million,  three  hundred  thousand.      However, 

•»C/.  Report  of  the  Illinois  Bureau  of  Labor  Statistics,  1888. 


149] 


THE  ASSESSMENT  OF  PERSONAL  PROPERTY 


149 


considerable  improvement  is  apparent  in  the  flistribution 
between  counties  since  1898. 


TABLE  II 

Comparison   of  Cook   County  with  the  Remainder  of  the  State  in 

Respect  to  the  Assessed  Value  of  Credits,  Not  Including 

Bankers'  Credits,  1873-1912, 


Population  Ratios 

1870  6:1 

1880   4:1 

1890   2:1 
Assessment  Ratios 

1900 

1.6:1 

1910 

1.3:1 

1880  83:1 

1890  57 

1900 

7 

1910 

9:1 

1881  19:1 

1891  79 

1901 

5 

191 1 

8:1 

1882  28:1 

1892  88 

1902 

4 

1912 

7:1 

1873  78 

1883  165:1 

1893  74 

1903 

6 

1874  78 

1884  68:1 

1894  21 

1904 

5 

187s  164 

1885  51:1 

1895  153 

1905 

7 

1876  142 

1886  42:1 

1896  126 

1906 

5 

1877  253 

1887  103:1 

1897  127 

1907 

4 

1878  115 

1888  95:1 

1898   8 

1908 

IS 

1879  143 

1889  85:1 

1899   2 

1909 

3 

Thus  far,  merely  the  internal  evidence  of  the  auditors' 
reports  has  been  presented.  These  reports  show  only  the 
property  which  has  been  assessed.  Therefore,  as  yet, 
nothing  definite  has  been  shown  about  the  property  w^hich 
should  have  been  assessed.  Here  help  was  secured  from 
the  Report  of  the  Bureau  of  Labor  Statistics  made  in  1888, 
which  contains  data  on  the  mortgage  indebtedness  of  the 
state  in  the  years  1880  and  1887.  It  happens  that  this 
report  contains  most  of  the  data  necessary  for  making 
the  proper  deductions  from  the  gross  amount  of  mortgages 
in  force,  thus  furnishing  a  figure  truly  comparable  with 
the  assessment.  Although  the  data  are  old,  they  never- 
theless have  a  present  day  significance. 

As  will  be  seen  by  referring  to  Table  12  the  first 
item  to  be  substracted  is  that  of  mortgages  for  deferred 
payments,  such  mortgages,  according  to  the  letter  of  the 
law,  being  eligible  to  deduction  for  debts.  Although  in 
actual  practice  few  deductions  are  allowed  from  such 
credits,  in  order  to  be  very  conservative  all  of  them  are 


150  HISTOKY  OF  TAXATION  IN  ILLINOIS  [150 

•  TABLE  12 

Taxable  Mortgages  in  i88o  and  1887  in  Cook  County  and  Entire  State. 

Entire  State  Cook  County 

1880  1887  1880  1887 

1.  Mortgages  in   force 

(a)    $196,656,074    $402,053,118    $  64,156,754    $220,603,230 

Deductions 

2.  Mortgages     for 

deferred  pay- 
ments,       (b)     36,396,957      104,176,179        10,109,304        60,377,848 

3.  Mortgages    for 

money  loaned, 
o  w  n  e  d  by 
non-residents 
(c)     21,936,152        30,935,515  6,268,329        13,283,899 

4.  Mortgages  own- 

ed by  building 
and  loan  as- 
sociations (d)       1,025,176        20,449,352  212,949         9,569,408 


Total    deduc- 
tions   $  59,358,285    $155,561,046    $  16,590,582    $  83,231.155 

5.  Total  taxable  mort- 

gages   $137,297,789  $246,492,072  $  47,566,172  $137,372,075 

6.  Assessed    value    of 

Credits    of    Other 

than   Bank,   etc $  17,680,302    $  12,160,825    $       211,815    $       117,170 

(a)  Item  i.  Mortgages  in  force,  was  obtained  by  multiplying  the 
mortgages  in  force  recorded  during  the  year  by  their  average  length  of 
term,  a  method  criticised  by  J.  P.  Dunn,  Jr.  (Political  Science  Quarterly, 
V,  73),  but  one  which  is  accurate  enough  for  this  purpose. 

(b)  Item  2,  Mortgages  for  deferred  payments,  includes  unaccrued 
interest,  as  does  also  Item  4,  Mortgages  owned  by  building  and  loan  asso- 
ciations. Sufficient  data  for  eliminating  the  interest  in  these  two  items 
are  not  supplied  in  the  report. 

(c)  Item  3,  Mortgages  for  money  loaned,  owned  by  non-residents, 
was  obtained  from  the  figures  given  in  the  report  for  all  mortgages  held 
by  non-residents.  The  average  term  of  a  mortgage  of  this  class  for  1880 
is  not  given  in  the  report.  It  is  assumed  that  it  was  the  same  for  1880 
as  for  1887.  It  would  not  be  proper  to  subtract  all  mortgages  held  by 
non-residents,  for  some  of  these  have  already  been  subtracted  in  the  Item 
2,  Mortgages  for  deferred  payments.  It  was  assumed  that  the  same  pro- 
portion of  mortgages  for  deferred  payments  was  held  by  both  residents 
and  non-residents.    Following  this  assumption  the  figure  in  the  table  was 


151]  THE  ASSESSMENT  OP  PERSONAL  PROPERTY  151 

considered  in  the  calculation  to  be  blotted  out  by  decla- 
rations of  debt. 

The  second  item  subtracted,  mortgages  owned  by 
non-residents,  is  also  over-conservative,  for  many  mort- 
gages on  property  in  other  statet.  were  owned  by  residents 
of  Illinois — perhaps  as  many  as  the  Illinois  mortgages 
owned  by  non-residents. 

But  the  figures  as  they  stand  after  the  foregoing 
substractions  still  include  the  mortgages  of  banks  and 
other  such  institutions  whose  credits  are  listed  under  a 
different  form.  Perhaps  the  most  important  of  these  com- 
panies, and  the  only  ones  for  which  information  is  ob- 
tainable, are  the  building  and  loan  associations;  their 
mortgages  are  accordingly  subtracted  also. 

The  figures  obtained  after  making  all  these  deduc- 
tions, represent  the  value  of  the  mortgages  which  should 
have  been  listed  in  1880  and  1887.^^  It  will  be  recalled 
that  the  item  of  the  auditors'  reports  with  which  these 
figures  are  to  be  compared,  is  supposed  to  include  not  only 
these  mortgages  but  also  notes  not  recorded,  accounts, 
mortgages  for  deferred  payment,  mortgages  in  other  states 
owned  by  citizens  of  Illinois,  and  every  other  demand  for 
a  valuable  thing,  not  cancelled  by  debts.  The  assessed 
value  of  credits  should  have  been,  then,  considerably  larger 
than  the  total  value  of  the  taxable  mortgages.  But  in 
1880,  as  is  shown  in  the  table,  when  there  were  over  one 
hundred  and  thirty-seven  millions  of  taxable  mortgages 
alone  in  the  state,  the  assessors  were  able  to  find  only 
about  eighteen  millions  of  all  kinds  of  credits.  In  the  same 
year  when  there  were  nearly  forty-eight  millions  in  mort- 

arrived  at  by  using  the  following  proportion :  the  total  amount  of  mort- 
gages is  to  the  total  amount  of  mortgages  for  money  loaned  as  the  total 
amount  of  mortgages  executed  to  non-residents  is  to  the  amount  of  mort- 
gages for  money  loaned  executed  to  non-residents,  or  x. 

(d)  No  average  terms  being  given  for  i88o,  those  for  1887  were 
used.  A  proportion  similar  to  that  used  in  Item  3,  was  resorted  to  in 
this  case  in  order  to  eliminate  the  mortgages  for  deferred  payments  be- 
longing to  building  and  loan  associations. 

3-No  account  is  taken  of  the  fact  that  some  mortgages  given  to  resi- 
dents of  Illinois  are  afterwards  transferred  to  non-residents. 


152  HISTORY  OF  TAXATION  IN  ILLINOIS  [152 

gages  which  should  have  been  taxed  in  Cook  County,  the 
assessed  value  of  all  credits  in  this  county  was  only  |211,- 
815.  The  figures  for  1887  are  even  more  unfavorable. 
By  that  time  the  taxable  mortgage  value  for  the  entire 
state  had  risen  to  |246,  492,  072,  but  the  assessed  value  of 
credits  had  actually  fallen  over  five  millions  from  the  1880 
figure — to  $12,160,825.  In  Cook  County,  it  would  appear 
from  the  assessors'  returns,  the  total  value  of  credits  was 
only  |117,170.  But  in  that  very  year  the  taxable  mortgages 
alone  amounted  in  this  county  to  |137,372,075.  This 
meant  that  in  Cook  County  the  assessment  efficiency  was 
about  one-tenth  of  one  per  cent.  Or,  to  state  it  in  another 
way,  about  nine  hundred  and  ninety-nine  mortgages  out 
of  each  one  thousand  escaped  taxation.  It  is  true  that 
real  estate  and  property  in  general  were  considerably  un- 
dervalued at  this  time.  But  mortgages,  when  reached 
by  the  assessor,  are  seldom  greatly  undervalued  and  there- 
fore the  great  bulk  of  the  discrepancies  between  real  and 
assessed  values  must  be  ascribed  to  evasion. ^^ 

It  is  not  difficult  to  make  a  rough  estimate  of  the  ef- 
ficiency of  the  law  at  the  present  time.  The  assessment 
in  1912  was  about  thirty-eight  and  one  half  million  dollars 
as  compared  with  the  twelve  million  in  1887.  What  the 
increase  in  taxable  mortgages  has  been  can  only  be  con- 
jectured; but  material  gathered  in  Jo  Daviess  County 
between  1900  and  1906  shows  that  in  this  single  county 
the  value  of  the  mortgages  subject  to  taxation  had  about 
trebled. ^^  If  this  were  true  for  the  entire  state,  it  would 
indicate  that  the  taxation  of  credits  in  Illinois  at  the 
present  time  is  but  little  less  a  farce  than  it  was  in  the 
eighties.  Indeed,  the  testimony  of  the  officers  who  enforce 
the  law  confirms  this  view.  The  special  counsel  for  the 
board  of  review  of  Champaign  County,  in  a  recent  campaign 
against  tax  dodgers,  declared  that  not  one  mortgage  in 


^^This  statement  assumes  that  the  mortgages  recorded  in  Cook  County, 
except  those  owned  by  residents  of  other  states,  were  owned  by  Chi- 
cagoans. 

^*  Wisconsin  Tax  Commission  Report,  1907,  p.  339. 


153]  THE  ASSESSMENT  OF  PERSONAL  PROPERTY  153 

twenty  was  taxed  and  the  county  treasurer  bore  him  out 
in  this  estimate. 

A  very  interesting  way  to  become  enlightened 
about  the  efficiency  of  mortgage  taxation  is  to  attend  a 
hearing  of  a  county  board  of  review.  There  you  find 
that  about  the  only  person  who  lists  a  mortgage  i» 
the  man  whose  property  has  recently  been  acquired 
through  inheritance  and  whose  possessions  are  known 
to  the  assessor  because  of  the  recently  probated  willy 
or  perhaps  an  occasional  woman,  who,  terrified  by 
an  order  to  appear  before  the  board,  trembling  admits  that 
she  owns  a  mortgage,  and  submits  to  a  tax  which  takes 
from  her  nearly  half  of  her  interest.  Sometimes  the  re- 
viewers do  not  even  bother  to  summon  skillful  business 
men  whom  they  know  to  have  mortgages  and  who  are 
conversant  with  the  rules  of  the  game.  Indeed  the  manner 
of  some  of  the  officials  would  indicate  that  they  consider 
it  more  or  less  of  a  joke  when  a  person  is  foolish  enough 
to  admit  that  he  is  the  owner  of  credits. 

Of  odds  and  ends,  therefore,  is  the  item  of  credits 
made  up.  Instead  of  the  great  mass  of  evidences  of  debt 
which  the  law  seeks  to  tax  under  this  head,  only  an  oc- 
casional mortgage  is  reached.  It  would  seem  that  forty 
years  was  a  sufficiently  long  time  to  experiment  with  the 
self-assessment  system  of  intangible  personal  property. 
The  result  of  the  experiment  is  known  to  all  who  have 
made  the  slightest  inquiry  into  the  situation;  there  is  no 
one  bold  enough  to  pretend  that  it  has  been  a  success. 
The  violent  fluctuations  from  year  to  year  in  the  assessed 
values,  the  wide  differences  between  the  returns  from  va- 
rious counties,  the  great  disparity  between  the  assessment 
values  and  the  estimates  of  the  actual  values  of  taxable 
credits,  and  the  testimony  of  common  observation  all 
condemn  the  present  plan  for  extracting  a  revenue  from 
this  class  of  intangible  personal  property. 

Bankers^  Gtedits. 
The  next  item  used  as  a  test  of  the  success  of  the 
property   tax   in    reaching   personal,  property   is   called 
Credits  of  Bank,  Banker,  Broker,  Stock-johher.    This  item 


154  HISTORY  OF  TAXATION  IN  ILLINOIS  [154 

is  an  excellent  example  of  the  complicated  nature  of  many 
of  the  provisions  of  the  law  which  the  local  officials  are 
called  upon  to  administer.  As  has  already  been  ex- 
plained,^ it  is  very  different  in  content  from  the  item 
just  considered.  Table  13  shows  the  values  assessed 
under  this  head  for  selected  years. 

TABLE  13. 

Assessed  Value  of  Bankers'  Credits,  1875-1912. 

Entire  State  Cook  County 

1875   $1,953,223  $   349,573 

1880   1,414971  55,342 

1885   1,337,114  105,610 

1890  1,050,489  30,308 

1895   1,724,611  12,225 

1900   1,919,722  236,366 

1905   3,539,058  233,013 

1906  2,173,885  286,069 

1907   3,872,426  247,924 

1908   - 3,902,282  229,073 

1909   5,722,372  481,619 

1910   7,180,020  1,686,397 

1911    8,375,682  2,559,073 

1912   _ 7,819,935  1,257,024 

The  insignificance  of  these  amounts  together  with  the 
fact  that  the  item  is  obviously  intended  to  gather  up  the 
left-overs,  makes  extended  comment  inadvisable.  A  few 
points  may  be  noted,  however,  as  being  indicative  of  the 
general  inefficiency  of  the  assessment.  Thus  the  bank 
credits  reported  in  1892  from  Cook  county,  including  Chi- 
cago, amounted  to  the  miserly  sum  of  $8,200.  Between 
1898  and  1899  they  jumped  from  |12,180  to  |1,919,433. 
The  sudden  rise  in  1899  was  probably  due  to  the  change 
in  the  revenue  law  of  that  year,  which  did  not  redefine 
credits  but  merely  modified  the  assessment  machinery. 
Changes  in  the  law  whicli  one  would  expect  to  see  clearly 
reflected  in  the  assesment  returns  seem  to  have  had  little 
or  no  effect.  Thus  the  law  of  1901  exempting  banks  incor- 
porated under  the  state  law  caused  no  falling  off  in  the 
assessment  values;  this  would  seem  to  indicate  that  the 

*'^ Supra,  p.  140. 


155]  THE  ASSESSMENT  OF  PERSONAL  PROPERTY  155 

TABLE  14 

Calculation  of  the  Net  Taxable  Credits  of  the  State  Banks  of 
Chicago  on  June  s,  T893  (a) 

Balance  of 
Gross  Tax-  Deductions        Net  Tax- 

able Credits     Deductions     over  Credits     able  Credits 

1.  Bank    of    Com- 

merce     $1,309,115.96    $1,586,973.39    $   277,857.43     

2.  Bank  of  Illinois 

3.  Central  Trust 

and      Savings 

Bank   3SS,8i5.33         198,313.57     $   iS7,50i.76 

4.  Chicago     City 

Bank    162,869.30  54,226.95     108,642.35 

5.  Chicago  Trust 

and      Savings 

Bank   829,113.67         404,133.23     424,980.44 

6.  Commercial 

Loan  and  Trust 

Co 1,134,434.06        956,142.35     178,291.71 

7.  Corn     Exchange 

Bank    7,043,022.79      7,857,974.15         814,951.36     

8.  Dime    Savings 

Bank    480,856.76         503,438.62  22,581.86 

9.  Garden     City 

Banking     and 

Trust    Co 1,081,646.30      1,051,279.22     30,367.08 

10.  Globe      Savings 

Bank    693,278.42         649,721.59 43,556.83 

11.  Home     Savings 

Bank   236,751.59         315,546.78  78,795.19     

12.  Homestead 

Loan       and 

Guaranty    Co 264,050.00  21,862.93     242,187.07 

13.  Illinois    Trust 

and      Savings 

Bank   15,015,375-97    18,856,185.58      3,840,809.61     

14.  Industrial   Bank 

of  Chicago 271,995.79         129,737.33     142,258.46 

15.  Interna  ti  on  a  1 

Bank    i,4o6,957-3i         958,592.89     448,364.42 

16.  Merchants  State 

Bank 25,000.00     25,000.00 

(a).    Compiled  from  the  reports  to  the  Auditor. 


156  HISTORY  OF  TAXATION  IN  ILLINOIS  [156 

TABLE  14 — Continued 

Balance  of 
Gross  Tax-  Deductions        Net  Tax- 

able Credits     Deductions     over  Credits     able  Credits 

17.  Milwaukee  Ave. 

State    Bank 759.983-64         590,014.31     169,96933 

18.  Northwes  tern 

Bond       and 

Trust   Co 722,076.42         646,349.47     75.726.95 

19.  Royal  Trust  Co.     884,368.60         53i, 154-53     353,214-07 

20.  South     Side 

State  Bank 107,502.49  18,202.65 89,299.84 

21.  State    Bank    of 

Chicago  2,087,165.85      2,101,863.54  14,697-69     

22.  The   American 

Trust  and  Sav- 
ings   Bank 3,937,478.98      4,876,751-57         93^272.59     

23.  The     Hibernian 

Banking  Asso- 
ciation      2,962,716.02      2,954,354-53     8,36149 

24.  The    Merchants 

Loan       and 

Trust   Co 9,456,229.52    10,517,370.85      1,061,141.33     

25.  The    Northern 

Trust    Co 4,264,573.75      5,849,280.90      1,584,707.15     

26.  The     Prairie 

State     Savings 

and  Trust  Co....  1,458,853.54      2,283,862.65         825,009.11     

27.  Union     Trust 

Co 2,148,769.14      3.074,530-16        925,761.02     


Total  Net  Taxable  Credits $2,497,721.80 

credits  of  the  state  banks  had  not  been  reached  for  taxa- 
tion. The  law  of  1903  classing  sums  in  the  hands  of  other 
banks  subject  to  draft  and  certain  cash  items  as  credits 
seems  to  have  had  little  effect  toward  increasing  the  as- 
sessment. Indeed,  the  amount  returned  in  1906  was 
smaller  than  that  returned  in  1902  (|2,173,885,  as  com- 
pared with  12,800,441). 

In  attempting  to  secure  a  figure  with  which  to  com- 
pare the  sum  returned  as  bank  credits,  recourse  was  made 
to  the  reports  of  the  state  banks  to  the  auditor  in  his 


157]  THE  ASSESSMENT  OF  PERSONAL  PROPERTY  157 

capacity  as  bank  examiner.  One  calculation  was  made 
from  the  reports  of  June  5,  1893,  and  another  from  reports 
rendered  on  April  27,  1900.^^  The  report  made  on  the 
date  nearest  the  assessment  day  yas  chosen  but  in  each 
case  it  fell  some  days  away,  and  during  this  time  it  is  pos- 
sible that  the  figures  in  the  bank  statements  changed  quite 
radically.  The  results  of  these  calculations,  therefore, 
should  be  accepted  with  these  facts  in  mind. 

By  referring  to  Table  14  it  will  be  found  that  in  1893 
the  state  banks  of  Chicago  had  net  taxable  credits  to  the 
amount  of  |2,497,721.80,  according  to  their  statements  of 
condition  made  thirty-six  days  before  the  date  of  assess- 
ment. The  credits  for  all  the  state  banks,  for  all  the  pri- 
vate banks,  brokers  etc.,  in  Cook  County,  including  Chi- 
cago, were  assessed  that  year  at  |22,375.  Property  in 
general  at  this  time  was  undervalued  greatly,  but  it  re- 
quires a  great  degree  of  undervaluation  to  explain  how 
two  and  one-half  million  in  credits  could  be  listed  at 
twenty  thousand  dollars.  These  figures  would  seem  to 
indicate  evasion  of  the  grossest  type.^" 

38The  tests  were  made  on  these  particular  dates  for  these  reasons. 
The  first  was  made  from  1893  data  in  order  to  check  the  results  of  the 
Report  of  the  Bureau  of  Labor  Statistics  {cf.  note  37).  The  year 
1900  was  chosen  for  the  second  test  because  it  is  probably  the  most  nor- 
mal of  recent  years.  In  1899  the  new  revenue  law  went  into  effect  and 
in  1901  the  state  banks  were  exempted  from  making  their  returns  in  this 
form.    L.  1901,  p.  266. 

"■Jn  a  report  on  taxation,  published  as  a  part  of  the  Report  of  the 
Bureau  of  Labor  Statistics  for  1894,  the  following  table  is  given  to  show 
the  efficiency  of  the  assessment  of  bank  credits.  The  table  is  compiled 
from  a  report  to  the  auditor  showing  the  condition  of  the  state  banks  in 
Chicago  on  June  5,  1893  (p.  34),  and  is  reproduced  exactly,  no  attempt 
being  made  to  eliminate  errors. 

Resources  of  Twenty-Seven  Chicago  Banks  as  Shown  by  the  Auditor's 

Report. 

Loans    and    Discounts $59  995,715.29 

Bonds  and  Stocks  (other  than  U.  S.) .'. 8,099,450.78 

Overdrafts   101,605.00 

Total  Taxable  Credits . $68,196,851.07 


158  HISTORY  OF  TAXATION  IN  ILLINOIS  [158 

In  1900,  on  the  other  hand,  the  assessment  figures  tell 
a  somewhat  different  story.  This  is  evident  from  Table  15. 
On  April  27,  twenty-seven  days  after  the  assessment  date 
of  that  year,  the  net  taxable  credits  of  twenty-five  state 
banks  in  Chicago  were  $568,700.49  according  to  the  bank 
statements.  The  bank  credits  reported  for  taxation  from 
Cook  County  on  April  1  of  that  year  were  valued  at  |236,- 
366.  But  this  valuation  was  avowedly  on  the  one-fifth 
basis,  so  that  it  should  be  multiplied  by  five  to  get  the  real 
cash  value  of  the  credits  assessed.  From  this  it  appears 
that  twenty-five  state  banks  in  Chicago  had  one-half  the 
whole  amount  of  credits  listed  for  all  the  bankers,  brokers, 

Subject  to  the  following  deductions: 

Savings  Deposits  $21 ,275,598.93 

Individual  Deposits  33,578,645.52 

Demand  Certif.  of  Deposit 2,049,027.18 

Time  Certif.  of  Deposit 3,686,203.97 

Certified  Checks  852,145.65 

Cashier's   Checks 498,367.74 

Due  to  Other  Banks 5,132,847.11 

Re-discounts  65,909.72 

Total  deductions  $67,138,745-82 

Net  Taxable  Credits,  June  5,  1893 1,058,105.25 

Net  Credits  Listed,  May  1,  1894. 10,000.00 

Difference   1,048,105.25 

The  errors  in  this  table  are  so  serious  as  to  make  it  utterly  worthless. 
First  of  all,  the  item  of  Bonds  and  Stocks  should  not  be  included  among 
the  credits,  for  the  law  provides  that  these  securities  shall  be  listed  as  a 
separate  item  on  the  assesment  roll  and  that  no  deduction  shall  be  al- 
lowed from  them.  The  subtraction  of  this  item  leaves  no  balance  of 
taxable  credits  at  all. 

But  much  more  serious  than  this  first  criticism  is  the  one  which  must 
be  made  against  the  general  method  employed.  The  table  is  merely  a 
computation  made  from  the  sum  totals  of  the  various  items  included  in 
the  statements  of  the  twenty-seven  banks.  But  the  assessor  does  not  treat 
the  banks  collectively.  Instead  of  taking  them  as  a  group  as  is  done  in 
this  statement,  he  assesses  each  one  individually.  Therefore  in  order  to 
make  a  fair  comparison,  it  is  necessary  to  ascertain  the  net  taxable  credits 
for  each  individual  bank,  add  them  together  and  contrast  with  the  credits 
assessed.  By  this  method  (cf.  Table  14)  even  more  startling  results  are 
obtained  than  were  presented  in  the  report. 


159]  THE  ASSESSMENT  OF  PERSONAL  PROPERTY  159 

and  the  stock-jobbers  in  Cook  County — a  statement  which 
on  the  face  of  it  reveals  no  great  undervaluation  or  evasion. 
It  appears  then  that,  although  the  evidence  in  regard 
to  the  assessments  of  the  credits  of  bankers  is  somewhat 
conflicting  and  inconclusive,  it  is  probable  that  underval- 
uation and  evasion  are  to  be  found  here  to  a  considerable 
degree. 

TABLE  15. 

Calculation  of  the  Net  Taxable  Credits  of  the  State  Banks  of  Cook 
County  on  April  27,  1900.(3) 
Gross  Tax-  Balance  of         Net  Tax- 

able Credits      Deductions      Deductions     able  Credits 

Avenue   State  Bank, 

Oak  Park  $    108,753.05    $   224,940.27    $    116,187.22 

Bank    of     Chicago 
Heights    131,451.09         188,339.26  56,888.17 

Bank  of  Harvey io5,907-73         171. 149-43  65,241.70 

Chicago   City   Bank..      546,703.56         501,587.74  $     45,115.82 

Foreman       Brothers 

Banking  Co 2,573,144.62      2,160,053.58  413,091.04 

Garden    City    Bank- 
ing and  Trust  Co.  2,025,473.39      2,332,622.44         307,149.05 

Hibernian      Banking 
Association  4,890,160.79      7,294,309.78      2,404,148.99 

Home    Savings  Bank  1,291,725.28      1,291,725.28 

Illinois     Trust     and 

Savings   Bank   34,905,790.61     59,601,610.24    24,695,819.63 

La      Grange      State 
Bank  112,658.76 

Lemont  State  Bank..       15,023.70 

Milwaukee  Ave. 

State  Bank 1,152,044.11 

Oak       Park       State 

Bank,  Oak  Park....      590,992.54 

Pearson-Taft     Land 
Credit  Co 751,023.96         669,051.88  81,972.08 

Prairie  State  Bank..  2,369,318.53 

Pullman    Loan     and 

Savings  Bank 822,352.03 

Royal  Trust  Co 1,936,892.85 

State  Bank  of   Chi- 
cago      4,552,061.94 


128,164.81 

15,506.05 

23,060.33 

8,036.63 

1,465,809.49 

313,765-38 

742,418.84 

151,426.30 

669,051.88 

3,121,209.60 

751,891.07 

1,440,052.46 

617,700.43 

^,Z(iA,Z2Z-17 

427,430.92 

5,474,348.95 

992,287.01 

(a)  Compiled  from  the  reports  of  the  Auditor. 


160  HISTORY  OP  TAXATION  IN  ILLINOIS  [160 

TABLE  IS — Continued 
Gross  Tax-  Deductions        Net  Tax- 

able Credits     Deductions      Deductions     able  Credits 
State  Bank  of  Evan- 

ston  628,083.30      1,129,788.20         501,704.90 

State  Bank  of  West 

Pullman  63,656.00  82,153.33  18,497.33 

American  Trust  and 

Savings   Bank  6,225,791.68      9,854,399-96      3,628,608.28  ♦ 

Merchants  Loan  and 

Trust  Co 13,334,768.38    21,097,983.40      7,763,215.02 

The  Northern  Trust 

Co 9,266,281.56    17,101,825.51      7,835,543.95 

The    Western    State 

Bank 591,78303        563,261.48  28,521.55 

The  Union  Trust  Co.  2,937,505.13      4,383,724.14      1,446,219.01 

Total  Net  Taxable  Credits $    568,700.49 

Tcmgihle  Personalty. 

The  assessor  has  had  poor  success  also  in  reaching 
tangible  personal  property  for  taxation.  The  long  col- 
umns of  figures  in  the  reports  of  the  state  auditor,  which 
present  the  results  of  the  assessors'  efforts  in  this  direction, 
belie  the  tradition  as  to  the  dryness  of  statistics.  So  rid- 
iculous are  some  of  the  returns  that  not  long  ago  they 
were  made  the  text  for  a  sketch  by  a  popular  writer  which 
appeared  in  the  comic  section  of  a  syndicate  of  newspapers. 
What  could  be  more  preposterous,  for  example,  than  the 
statement  that  the  full  cash  value  of  all  the  diamonds  and 
jewelry  in  Chicago  in  1911  was  only  about  a  half-million 
dollars ?^^  and  this  finds  a  worthy  companion  in  the  state- 
ment that  there  is  not  a  single  patent  of  value  owned  by  a 
resident  of  the  city.^®  According  to  the  assessment  figures, 
melodeons  and  organs  have  been  relegated  entirely  to  tlie 
rural  regions  for  not  one  instrument  was  found  in  metro- 
politan Cook  County.^®     Pianos  in  Perry  County  have  a 

''$576,900;  assessed  value  $192,300.    Auditor's  Report,  1912,  p.  432. 
'^Ibid.,  p.  430. 
*°Ibid.,  p.  428. 


161]  THE  ASSESSMENT  OF  PERSONAL  PROPERTY  161 

fair  cash  value  of  about  fifteen  dollars  apiece.*^  But  in 
spite  of  their  apparent  cheapness,  the  number  assessed 
shows  that  they  are  quite  scarce;  there  were  not  one  hun- 
dred and  fifty  thousand  in  the  entire  stat«  in  1911.*^ 
Watches  and  clocks  are  also  surprisingly  rare  in  view  of 
their  extremely  low  cost.  The  average  timepiece  in  1911 
had  a  fair  cash  value  of  about  six  dollars  and  a  half,^^  and 
yet  there  were  only  328,306  in  the  entire  state.  In  Cook 
County,  only  one  person  in  every  one  hundred  and  eighty- 
eight  could  afford  a  watch  or  clock.  Cook  County  is 
twenty-five  times  as  populous  as  Kane  County,  but  con- 
tains only  a  few  more  watches  and  clocks.*^  It  is  a  heavy 
blow  to  the  literary  reputation  of  the  state  to  have  the 
statement  published  broadcast  that  only  eighty-five  per- 
sons in  the  state  were  the  fortunate  possessors  of  annuities 
or  royalties  of  any  sort  in  1911.*^  Again,  franchises  were 
listed  in  Cook  County  to  the  number  of  seventeen  with  a 
total  cash  value  of  f  7,782.'»« 

Money. 

A  very  satisfactory  item  for  use  in  comparing  real 
with  assessed  values  is  that  called  "Moneys  of  other  than 
bank,  bankers  etc."    All  persons  not  included  in  the  legal 

*i$i5.54;  assessed  value  $5.18.    Ibid.,  p.  427. 

*^Ibtd. 

*3$6.5i ;  assessed  value  $2.17. 

**The  population  of  Kane  County  is  91,862  and  that  of  Cook  is 
2,405,233.  12,780  watches  and  clocks  are  listed  for  Cook  County  and 
10,663  for  Kane. 

*^Aud.  Rept.  1912,  p.  429. 

**Assessed  value  $2,594.    Ihid.,  p.  428. 

A  resident  of  Champaign  County  bought  an  automobile  in  1912  for 
$2,500.  He  gave  its  fair  case  value  to  the  assessor  as  $1,000.  Some  time 
later,  prompted  by  a  qualm  of  conscience,  he  contemplated  increasing  his 
valuation  but  before  doing  so,  happened  to  recall  that  a  neighbor,  a 
county  tax  official,  had  paid  $3,000  for  a  machine  and  decided  before 
making  any  change  to  see  what  valuation  this  man  had  placed  on  his  car. 
When  he  found  that  the  new  $3,000  automobile  was  listed  at  $200,  he 
decided  that  his  own  statement  needed  no  revision  upward. 

Instances  of  this  sort  might  be  multiplied  indefinitely. 


162 


HISTORY  OF  TAXATION  IN  ILLINOIS 


[162 


definition  of  bank,  banker,  broker  etc.^^  are  required  by 
the  law  to  list  whatever  money  they  may  possess  under 
this  item.  This  is  practically  a  tax  upon  bank  credit  in 
the  hands  of  private  individuals^^  and  it  is  possible  to  test 
its  success  by  comparing  the  assessed  values  with  bank 
deposits. 

But  first  it  may  be  well  to  glance  at  the  assessment 
figures  for  the  whole  period.  The  assessed  values  of  this 
item  for  the  years  specified,  as  shown  by  the  auditors'  re- 
ports, were  as  follows: 

TABLE  i6. 
Assessed  Value  of  Moneys,  Not  Including  Bankers'  Moneys,  1875-1913. 

Entire  State  Cook  County 

1875   $15,248,399  $   294,712 

1880   13,014,803  1,207,874 

1885   9,345,880  1,164,552 

1890   9,456,573  1,061,264 

189s   - 9,176,947  1,459,384 

1900   15,115,652  1,675,331 

1905   18,435,506  1,757,465 

1906   18,773,144  1,914,927 

1907   18,944,236  1,761,304 

1908   18,728,241  963,907 

1909   31,257,604  1,368,952 

1910  32,204,798  1,819,565 

191 1    35,525,479  3,733,947 

1912   33,828,858  2,173,277 

The  variations  in  this  case  are  not  so  great  as  they  were 
in  the  assessments  of  credits.  An  increase  from  about 
eight  to  eighteen  million  dollars  in  1899  as  compared  with 
1898  is  eloquent,  however.  It  is  also  quite  surprising  to 
learn  that  there  was  only  a  little  more  than  tAVO  hundred 
thousand  dollars  (|212,601)  in  Cook  County  in  1878. 
Again,  as  in  the  case  of  credits,  Cook  County  fails  under 

*''Supra,  p.  141 ;  L.  1871-72,  p.  68. 

•**The  definition  of  money  given  in  the  revenue  law  is  as  follows : 
gold,  silver,  or  other  coin,  paper,  or  other  currency  used  in  barter  and 
trade  as  money,  in  actual  possession,  and  every  deposit  which  the  person 
owning,  holding  in  trust,  or  having  the  beneficial  interest  therein,  is  enti- 
tled to  withdraw  in  money  on  demand. 


163]  THE  ASSESSMENT  OF  PERSONAL  PROPERTY  163 

the  population  test  to  bear  its  share  of  the  burden.  In  1875 
when  there  were  six  persons  in  the  rest  of  the  state  for 
every  one  person  in  Cook  County,  fifty-one  dollars  were 
listed  for  every  dollar  in  Cook.  In  1909  each  person  out- 
side of  Cook  County  paid  fourteen  times  as  great  a  tax  on 
his  money  as  did  the  resident  of  Cook  County  on  his  money, 
assuming  per  capita  wealth  to  be  the  same.  In  this  year 
Cook  County's  share  of  the  assessment,  under  this  assump- 
tion, should  have  been  |19,536,002;  its  actual  assessment 
amounted  to  |1,368,952. 

The  amount  of  deposits  in  the  state  banks  has  been  a 
matter  of  public  record  only  since  1889.  The  deposits  of 
the  national  banks  are  available  during  the  whole  period. 
No  figures  at  all,  however,  are  obtainable  for  the  private 
banks  in  the  state.^® 

Table  17  presents  the  amounts  of  the  money  on  deposit 
to  the  credit  of  individuals  in  state  and  national  banks 
for  the  past  twenty -three  years,  and  contrasts  with  them  the 
assessments  of  money  during  these  years. 


*9The  information  in  the  table  has  been  secured  from  the  Reports  of 
the  Comptroller  of  the  Currency  of  the  United  States  and  the  Reports  of 
the  Auditor  of  Public  Accounts  of  Illinois.  The  item  called  individual 
deposits  in  the  national  banks  reports  is  used,  and  in  the  state  bank  reports, 
the  three  items,  time-deposits — \savings,  demand-deposits — individual,  and 
demand-deposits — certificates  were  added  together  to  give  the  result  pre- 
sented. The  reports  made  nearest  the  assessment  dates  were  chosen  in 
each  case.  The  national  banks  in  Cook  County,  but  outside  of  Chicago, 
were  ignored  because  sufficiently  detailed  information  is  given  only  in 
reports  which  are  separated  widely  in  time  from  those  which  had  been 
selected  as  desirable  for  this  table.  The  item  is  negligible  in  this  connec- 
tion, at  no  time  being  more  than  two  million  dollars.  The  amount  of  the 
deposits  in  the  state  banks  in  Cook  County  in  1891  is  not  accessible.  In 
the  table  it  is  assumed  that  it  was  the  same  as  that  of  1890. 


164 


HISTORY  OF  TAXATION  IN  ILLINOIS 


[164 


TABLE  17. 

Comparison  of  Individual  Bank  Deposits  with   Assessed  Values  of 

Moneys,  Not  Including  Bankers'  Moneys,  1889-1912 

Entire  State  Cook  County 

Deposits  of  Deposits  of 

State  and  Assessed  Value  State  and  Assessed  Value 

National  Banks  of  Money,  etc.      National  Banks  of  Money,  etc, 

1889 $124,374,251  $    9.516,138  $  80,551,333  $    1,221,899 

1890 142,040,086  9,456,573               98,937,333  1,061,264 

1891 174,118,198  9,267,494  107,119,654  997,682 

1892 203,871,992  9,195,67s  139,815,693  .      970,129 

1893 191,041,772  9,950,825  127,696,103  1,346,164 

1894- 193,964,276  7,769,358  139,101,367  434,244 

1895 201,392,368  9,176,947  137,730,861  1,459,384 

1896. 203^737,857/  8,196,180  140,209,621  1,279,057 

1897 200,163,357  8,633,129  141,074,633  1,093,315 

1898 242,048,068  7,951,202  167,209,535  839,566 

1899 296,785,239  17,742,210  211,032,906  4,203,385 

1900. 317,169,861  15,115,652  220,149,202  1,675,331 

1901 384,658,927  16,398,755  265,797,468  2,041,967 

1902 432,974,839  16,473,438  393,055,447  1,912,24s 

1903 473,542,783  17,148,064  318,308,938  1,855,244 

1904. 519,943,194  17,888,563  347,848,769  1,965,905 

1905 603,081,049  18,435,506  409,875,260  1,757,465 

1906 623,789,413  18,773,144  416,493,425  1,914927 

1907 670,862,704  18,944,236  440,424,025  1,761,304 

1908 674,353,841  18,728,241  440,822,737  963,907 

1909 729,878,790  31,257,604  473,673,979  1,368,952 

1910 815,767,828  32,204,798  521,099,660  1,819,565 

191 1 863,342,364  35,525,479  555,610,648  3,733,947 

1912 958,707,244  33,828,858  622,524,029  2,173,277 


This  table  speaks  for  itself.  In  not  a  single  year  does 
the  assessment  approach  the  amount  of  the  bank  deposits. 
In  1889  the  best  showing  is  made,  but  even  here  the  assess- 
ors reached  only  one  dollar  in  thirteen.  This  assessment 
is  somewhat  better  than  it  seems  to  be  at  first,  for  real 
estate  and  property  in  general  were  undervalued  at  this 
time.  In  1898  when  only  about  eight  million  was  taxed, 
two  hundred  and  forty-two  million  was  on  deposit.  Cook 
county,  as  usual,  can  show  a  record  even  worse  than  that 
of  the  whole  state.    Each  year  shows  a  lower  percentage 


165]  THE  ASSESSMENT  OF  PERSONAL  PEOPERTY  165 

than  was  taxed  in  the  state  at  large.  But  the  climax  is 
reached  in  1908  when  less  than  five  millions  was  assessed 
in  the  county  (|963,907  representing  a  twenty  per  cent 
valuation),  while  over  four  hundred  and  forty  million 
stood  to  the  credit  of  individuals  in  the  banks.  The  assess- 
ment for  1912  is  almost  as  bad  as  that  of  1908.  Comment 
on  these  figures  is  superfluous.  Evidently  from  the  stand- 
point of  the  exchequer,  money  is  not  taxed  in  Illinois. 

To  examine  further  the  various  items  of  the  personal 
property  schedule  could  have  no  other  effect  than  to  con- 
firm what  has  already  been  shown  clearly  enough  for  the 
purpose  in  hand.  It  is  quite  evident  that  the  general  prop- 
erty tax  has  most  woefully  failed  to  reach  personal  prop- 
erty for  taxation. 


CHAPTER    IX 

The  Assessment  of  Real  Estate 

Definition  of  Real  Estate. 

The  second  great  class  of  property  is  real  estate.  By 
the  definition  given  in  the  revenue  code  this  term  includes 

not  only  the  land  itself,  whether  laid  out  in  town  or  city  lots,  or  other- 
wise, with  all  things  contained  therein,  but  also  all  buildings,  structures 
and  improvements,  and  other  permanent  fixtures,  of  whatsoever  kind, 
thereon,  and  all  rights  and  privileges  belonging  or  in  anywise  pertaining 
thereto,  except  where  the  same  may  be  otherwise  denominated  by  this 
act.i 

The  few  exceptions  to  this  general  description  are  noted  in 
the  discussion  of  personal  property.^ 

The  general  real  estate  assessment  is  made  quadren- 
nially but  corrections  and  additions  are  made  annually.'^ 
Annual  assessments  of  all  real  estate  were  made  before 
1899.^  An  act  passed  in  1879  provided  that  an  assessment 
should  be  made  in  1880  and  every  four  years  thereafter 
but  before  the  time  came  for  the  1881  assessments,  the  law 
was  repealed  and  annual  assessments  once  more  estab' 
lished. 

Manner  of  Listing. 

The  assessment  books  are  prepared  by  the  county 
clerk  every  fourth  year  and  contain  descriptions  of  all  tax- 

iL.  1871-72,  p.  68. 

^See  supra  p.  138.  Interstate  bridges  are  specifically  designated  as 
real  estate  by  an  act  of  1873.  Rev.  Stat.  1874,  p.  908.  A  leasehold  interest 
in  exempted  lands  was  similarly  classified  by  a  clause  in  the  original  act. 
L.  1871-72,  p.  18. 

Government  and  school  lands  are  taxable  as  soon  as  entered  or  sold, 
Illinois  and  Michigan  Canal  lands  when  paid  for  in  full,  Illinois  Central 
lands  when  the  ,]ast  payment  becomes  due  and  swamp  lands  when  the 
county  conveys  the  title.    L.  1871-72,  p.  18. 

8L.  1898,  p.  36. 

*L.  1871-72,  p.  17;  L.  1879,  p.  241;  L.  i88r,  p.  133. 

166 


167]  THE    ASSESSMENT   OF   REAL   ESTATE  167 

able  real  estate  together  with  the  names  of  the  owners.'^ 
To  enable  the  county  clerk  to  prepare  these  books  properly, 
it  is  required  that  when  a  tract  of  'and  has  been  divided 
into  parcels  in  such  a  way  that  description  is  difficult,  the 
owner  shall  have  it  plotted  into  lots  which  can  be  simply 
described.**  Moreover  the  county  clerks  are  informed  by 
the  state  auditor  of  lands  in  their  counties  which  become 
taxable,  the  auditor  being  instructed  to  secure  this  infor- 
mation from  the  proper  officials  of  the  United  States,  of 
the  Illinois  and  Michigan  Canal,  of  the  Illinois  Central 
Railroad  and  of  the  counties  containing  swamp  lands/  In 
counties  under  township  organization  the  books  are  made 
up  by  townships ;  in  those  under  the  county  form  of  organ- 
ization, by  congressional  townships.  Special  books  may 
be  prepared  for  assessments  in  cities.^  In  those  years 
when  a  general  assesment  of  real  estate  is  not  made,  the 
county  clerk  prepares  a  supplementary  list  of  lands  which 
have  become  taxable  in  the  preceding  year.^ 

Assessment  books  must  be  ready  by  the  first  day  of 
the  assessment  period  when  the  assessors  are  directed  to 
call  for  them  and  to  proceed  to  view  and  determine  the 
value  of  each  parcel  of  real  estate.^*^  If  the  assessor  dis- 
covers property  which  has  been  omitted,  improvements 
which  have  been  made,  or  depreciation  which  has  come 
about  in  the  real  estate,  he  revises  the  assessment  lists  so 
as  to  make  them  as  complete  and  correct  as  possible. ^^ 

Undervaluation. 

All  through  the  period  under  discussion  undervalua- 
tion of  real  estate  is  patent  upon  the  face  of  the  returns. 

5L.  1871-72,  p.  19;  L.  1873-74,  P-  51;  L.  1879,  p.  241;  L.  1881,  p.  133; 
L.   1885,  p.  23. 

^L.   1871-72,  p.  18;  L.   1879,  p.  255. 

^L.  1871-72,  p.  64. 

^Ibid.,   p.  19.  », 

»L.  1898,  p.  36;  L.  1903,  p.  297;  L.   1905,  p.  360. 

^•'L.  1871-72,  pp.  19,  20,  21  ;L.  1879,  p.  243;  L.  1881,  pp.  133,  134;  L. 
1898,  p.  36. 

"L.  1871-72,  p.  20;  L.  1885,  p.  234;  L.   189s,  p.  36;  L.   1905,  p.  360. 


168  HISTORY  OF  TAXATION  IN  ILLINOIS  [168 

Thus,  according  to  the  assessment  figures  the  value  of  the 
real  estate  in  the  state  actually  decreased  in  the  twenty 
years  following  1873— from  $897,615,195  to  1613,093,407.^2 
Yet  during  this  period  over  four  hundred  million  dollars 
worth  of  buildings  had  been  erected  in  Chicago  alone,^-^ 
and  actual  land  values  had  increased  enormously. 

The  assessment  figures  for  1873,  however,  are  unusu- 
ally high,  this  being  the  year  when  the.  new  revenue  law 
went  into  effect.  But  there  is  evidence  which  seems  to 
indicate  serious  undervaluation  even  in  the  1873  figures. 
The  evidence  comes  from  Cook  County.  Before  1875  Chi- 
cago had  two  annual  assessments  of  property — the  town- 
ship assessors  making  one  estimate  for  county  and  state 
purposes  and  the  city  assessors  making  a  distinct  assess- 
ment for  city  purposes.  When  these  two  assessments  for 
1873  are  compared  it  appears  that  the  city  assessors  found 
the  real  property  in  the  North,  South,  and  West  Divisions 
of  the  city  to  be  worth  one  hundred  millions  more  than  the 
value  placed  upon  it  by  the  township  assessors  for  state 
purposes.^* 

In  1896  Mayor  Swift's  commission  found  the  value  of 
the  taxable  real  estate  in  the  district  investigated  in  Chi- 
cago to  be  $438,447,180,  while  the  assessed  value  of  the 
property  was  only  $40,668,720.^ '^  In  his  report  to  the  tax 
commission  of  1910  Professor  J.  A.  Fairlie  points  out  that 
in  1890  the  real  estate  assessments  were  less  than  one-fifth 
of  the  census  estimates  of  the  full  value  of  taxable  real 
estate.^* 

It  will  be  recalled  that  in  1898  the  legal  rate  of  under- 
assessment was  placed  at  this  figure,  twenty  per  cent,  but 
the  statistics  of  1900  and  of  1904  indicate  that  the  assess- 
ment had  fallen  still  lower  and  stood  then  at  but  one- 
seventh  of  the  true  value.^^     Complaints  received  by  the 

i^Fairlie,  Report  on  Taxation  and  Revenue  System  of  Illinois,  p.  203. 

"/?e/>^  Bu.  Lab.  Stat.,  1894,  p.  68. 

^*$262,g6g,S20  as  compared  with  $162,739,712.    Ibid.,  p.  67. 

^'^Ibid.,  1896,  p.  124. 

^'Fairlie,  op.  cit.  p.  26. 


169]  THE   ASSESSMENT   OF   REAL  ESTATE  169 

tax  commission  indicated  that  in  1910  the  amount  settled 
upon  by  the  assessors  as  the  full  value  of  the  real  estate 
was  "only  from  fifty  to  seventy-fives^er  cent  of  the  actual 
value  of  the  property  assessed." 

Specific  cases  of  undervaluation  are  perhaps  less  val- 
uable, but  are  certainly  more  striking  evidence  of  the  prac- 
tice. The  Report  of  the  Bureau  of  Labor  Statistics  for 
1894  cites  the  example  of  a  piece  of  property  whose  actual 
value  in  1873  was  $9,300  but  which  was  valued  by  the  as- 
sessors at  but  $330.  Another  house  and  lot  sold  in  1893 
for  $45,000;  the  same  year  the  assessor  estimated  its  fair- 
cash  value  at  $270.^^  In  1912  there  was  a  residence  in 
Champaign  County  which  competent  judges  valued  at  $30,- 
000;  it  appeared  on  the  assessment  books  at  $2,200.  A 
resident  of  the  same  county  recently  purchased  a  piece  of 
real  estate  for  $10,000.  Its  valuation  for  taxation  purposes 
was  placed  at  $1,800.  The  legal  valuation  at  this  time  was 
33  1-3%. 

Inequaliti/. 

Yet  undervaluation  would  be  of  comparatively  little 
moment  if  it  were  uniform,  that  is,  if  there  were  no  in- 
equalities in  the  rate  of  the  undervaluation  among  indi- 
viduals or  localities.  But  if  there  is  undervaluation,  there 
is  almost  necessarily  inequality.  The  difficulty  is  well  em- 
phasized in  the  report  of  the  revenue  commission  of  1886.^^ 
"The  assessor,  having  forsaken  the  standard  of  the 
law,"  the  report  reads,  "is  without  guide  or  restraint,  ex- 
cept his  own  varying  judgment,  and  subject  to  the  pressure 
of  importunate  tax-payers,  who  pull  steadily  downward.'' 
That  inequalities  have  resulted  in  Illinois,  no  one  can  deny. 
All  through  the  period  they  have  been  the  cause  of  discus- 
sion and  condemnation.  Every  writer  who  has  looked  into 
the  situation  has  found  much  to  criticise.  In  1886  the 
revenue  commission  reported  that  "the  realty  of  one  man  is 
assessed  at  one-third,  one-half, '  two-thirds    or    even    full 

isp.  s8. 
isp.  iv. 


170  HISTORY  OF  TAXATION  IN  ILLINOIS  [170 

measure  of  its  actual  value;  while  that  of  his  neighbor  is 
assessed  at  one-sixth,  one-tenth,  one-twentieth,  or  as  was 
shown  in  one  instance  of  considerable  magnitude,  one 
twenty-fifth  of  its  actual  value."  "Such  distinctions,"  con- 
tinues  the  report,  "are  too  invidious  to  be  meekly  borne." 

The  Report  of  the  Bureau  of  Labor  Statistics  in  1894 
was  especially  bitter  in  its  attack  upon  the  inequalities  of 
the  real  estate  assessments.  In  the  case  of  thirty  pieces  of 
high  class  residence  property  in  Chicago,  worth  |20,000 
and  above,  the  assessments  in  1893  were  found  to  vary 
from  four  to  about  twelve  per  cent  of  the  real  value  of  the 
property.^*^  On  the  other  hand  the  assessments  of  less 
choice  property  approached  more  nearly  the  true  value. 
Among  eighty  pieces  of  property,  each  of  which  sold  for 
less  than  |4,000,  the  assessments  varied  from  twelve  to 
forty  per  cent  of  the  actual  market  value.^^  The  evils  of 
throwing  a  disproportionate  share  of  the  tax  burden  upon 
the  small  property  owners  are,  of  course,  only  too  appar- 
ent. 

The  investigation  made  for  the  tax  commission  of  1910 
failed  to  reveal  "any  large  variation  in  the  relative  degree 
of  undervaluation"  between  rural  and  urban  real  prop- 
erty ,^^  but  it  was  pointed  out  that  the  degree  of  underval- 
uation varied  greatly  between  the  counties.  On  the  basis 
of  the  census  data  it  was  shown  that  in  1900  the  assessed 
value  varied  in  the  different  counties  from  about  eleven  to 
nineteen  per  cent;  and  in  1904  from  about  thirteen  to 
twenty  per  cent.  Compared  with  data  furnished  by  tlie 
new  census  (1910),  the  quadrennial  assessment  of  1911 
shows  a  truly  startling  variation  in  undervaluation,  rang- 
ing from  about  fourteen  per  cent  in  Kankakee  County  to 
about  forty-three  per  cent  in  Alexander  County.^^ 


2op.  88, 

2i/&trf.,  pp.  92-94. 

22Fairlie,  op.  cit.,  p.  26. 

^^Thirteenth   Census,  VI,  426,  430;   Proc.  St.  Bd.  Equal.,   1911,  pp. 
27,  28.  ^ 


171]  THE   ASSESSMENT   OP   REAL   ESTATE  171 

Recommendations.  * 

To  increase  the  efficiency  of  the  real  estate  assessments 
the  tax  commission  of  1886  recommended  not  only  the  sub- 
stitution of  county  for  township  assessors,^*  but  also  the 
establishment  of  a  small  state  board  of  tax  commissioners 
and  the  segregation  of  the  sources  of  the  state  and  local 
revenues.^^  This  last  suggestion  is  here  found,  according 
to  Professor  Seligman,  "for  the  first  time  in  the  history  of 
official  commissions."^^  The  report  of  this  commission 
was  considered  timely  enough  in  1902  to  justify  a  reprint 
by  the  state.  But  its  suggestions  have  found  no  response 
in  legislative  action. 

The  special  tax  commission  of  1910  reiterated  the  rec- 
ommendation contained  in  the  report  of  1886  in  regard  to 
the  appointment  of  a  permanent  tax  commission  and  it  sug- 
gested further  the  advisability  of  constitutional  changes 
permitting  the  different  treatment  of  various  kinds  of 
property  for  taxation  purposes. ^'^  Moreover  in  Professor 
Fairlie's  report  it  was  suggested  that  "to  secure  the  largest 
results,  it  would  seem  necessary  to  change  radically  the 
method  of  selecting  local  assessors  so  as  to  eliminate  polit- 
ical and  local  influences,  by  making  such  officers  appoint- 
ive for  longer  terms  and  for  larger  districts."-^  One  of 
the  members  of  the  commission,  H.  B.  Riley,  made  an  inde- 
pendent report  in  favor  of  assessors  appointed  under  civil 
service  regulations.  But  thus  far,  all  the  recommenda- 
tions and  suggestions  of  this  commission  have  had  no  more 
effect  upon  the  legislature  than  those  of  the  earlier  com- 
mission.^^ 

Thus  the  testimony  of  all  commissions  which  have  in- 
vestigated unites  to  convict  the  general  property  tax  in  Illi- 


2*C/.  infra,  p.  135. 

"^^Rept.  Rev.  Com.,  1886,  pp.  iv,  vi,  viii,  ix,  xiii. 

2«E.  R.  A.   Seligman,  Essays  in  T^axation,   (seventh  edition,  N.  Y., 
191 1 )  p.  401. 

275.  /.,  47  G.  A.,  I  Sess.,  p.  184  et  seq. 

28Fairlie,  op.  cit.,  pp.  27-28. 

'^S.  J.,  47  G.  A.,  I  Sess.,  pp.  187-188. 


172  HISTORY  OP  TAXATION  IN  ILLINOIS  [172 

nois  of  inefficiency  in  the  taxation  of  real  estate.  Time 
and  time  again  undervaluation  and  discrimination  have 
been  shown  to  exist.  Unlike  personal  property,  real  estate 
does  not  in  any  case  escape  taxation  entirely.  One  comes 
to  suspect  that  this  is  so  only  because  it  is  almost  phys- 
ically impossible.  But  all  suggested  changes  to  remove 
the  temptation  to  undervaluation  or  to  institute  adminis- 
trative supervision  which  would  go  far  to  check  abuses 
have  found  no  favor  in  the  eyes  of  the  Illinois  legislators. 
In  the  case  of  personal  property  there  seems  to  be  a  rea- 
sonable doubt  whether  the  law  is  enforceable.  There  is  no 
such  doubt  in  the  case  of  real  estate.  New  York  is  able, 
in  assessing  her  real  estate,  so  approximate  so  closely  its 
market  value  that  real  estate  dealers  find  the  tax  returns 
a  valuable  guide  in  fixing  prices.  A  similar  condition 
should  obtain  in  Chicago. 


CHAPTER    X. 

Eeview^  Equalization^  Extension  and  Collection 
review  and  equalization. 

The  system  of  review  and  equalization  was  evolved,  it 
will  be  recalled,  in  an  attempt  to  abate  the  abuses  which 
had  arisen  from  the  undervaluation  of  property  in  one 
locality  as  compared  with  another.  The  theory  of  this 
plan  is  that  the  figures  arrived  at  by  the  assessors  working 
in  the  field  shall  be  checked  up,  corrected  and  compared 
with  the  values  arrived  at  by  other  assessors,  and  any  dis- 
crepancies, mistakes  or  undervaluations  corrected. 

When  the  county  clerk  receives  the  assessment  books 
from  the  assessor,  he  corrects  all  the  errors  he  can  discern.^ 
Formerly,  in  counties  which  had  townships,  there  was  a 
township  board  of  review,  composed  of  the  assessor,  clerk 
and  supervisor  of  the  town,  which  met  annually  to  hear 
complaints  and  make  adjustments;  but  this  was  done 
away  with  in  1898.^ 

County  Board  of  Review. 

In  all  counties  during  the  entire  period  there  has  been 
a  revision  by  a  county  board  of  review,  but  the  composition 
of  this  board  has  varied.  Before  1898  the  board  of  super- 
visors or  the  board  of  county  commissioners  acted  as  the 
revising  board  for  the  counties.^  Since  1898  the  assess- 
ments in  the  counties  not  under  township  organization 
have  continued  to  be  reviewed  by  the  board  of  county  com- 
missioners.^ In  the  township  counties,  on  the  other  hand, 
the  board  of  review  has  been  differently  constituted.  At 
present  it  is  made  up  of  the  chairman  of  the  board  of  super- 

^L.  1871-72,  p.  24. 

^Ibid.,  p.  22;  L.   1879,  p.  243;  L.   i88r,  p.  134;  L.   1891,  p.  187;  L.   1898, 
p.  36  et  seq.;  L.  1907,  p.  495.        .  '  . 
3L.  1871-7:?,  pp.  24,  25. 
*L.   1898,  p.  36. 

173 


174  HISTORY  OF  TAXATION  IN  ILLINOIS  [174 

visors  and  two  citizens  of  the  county,  one  from  each  of  the 
leading  political  parties,  appointed  by  the  county  judge.^ 
An  exception  is  made  in  the  case  of  counties  having  a  popu- 
lation of  over  125,000  (Cook  County).  Here,  after  a  pre- 
liminary revision  by  the  board  of  assessors,  the  lists  go 
before  an  elected  board  of  review.  The  three  members  of 
this  board  are  chosen  for  terms  of  six  years,  one  member 
being  elected  every  two  years.^ 

Little  is  to  be  expected  under  the  system  in  force  in 
counties  under  township  organization,  where  two  of  the 
members  are  appointed  annually.  The  investigation  made 
for  the  revenue  commission  of  1910  showed  that  there  was 
criticism  of  this  feature  on  the  ground  that  it  promoted 
frequent  changes  of  membership  and  prevented  "the  board 
from  becoming  to  any  important  degree  an  expert  body."^ 
The  situation  must  often  work  out  as  it  has  in  one  partic- 
ular county  recently  investigated,  where  the  chairman  of 
the  board  of  supervisors  was  assisted  by  a  boiler-maker 
and  bar-tender,  the  appointed  members,  both  of  whom  were, 
as  the  chairman,  confided,  almost  utterly  ignorant  of  the 
revenue  law  and  devoid  of  the  desire  and  the  intelligence 
necessary  to  learn.  Their  function  was  to  act  as  clerks 
to  the  supervisor  who  changed  assessments  as  he  chose, 
often  without  going  through  the  formality  of  asking  the 
approval  of  the  other  members. 

The  Cook  County  board  of  review  has  not  in  recent 
years  been  subject  to  criticism  because  of  lack  of  intelli- 
gence. The  more  serious  charge  that  the  members  of  the 
board  have  made  use  of  their  oflflce  to  aid  their  private 
business  has  been  made  by  the  Illinois  Tax  Reform  Asso- 
ciation. It  has  been  urged,  to  prevent  such  abuses,  that 
none  of  the  board  be  permitted  to  engage  in  business  during 
his  term  of  office.® 

5L.  1901,  p.  267;  L.  1907,  p.  497.  This  arrangement  has  held  since 
1901.  For  three  years  preceding  this  date  the  board  was  made  up  of  the 
clerk  of  the  county  court,  the  chairman  of  the  county  board  and  one 
citizen  appointed  by  the  county  judge.    L.  1898,  p.  36. 

'Ibid.,  p.  36  et  seq. 

^Fairlie,  Report  on  Taxation,  p.  13. 

'Report  of  the  Illinois  Tax  Reform  Association,  1908,  pp.  6,  7. 


175]  REVIEW,    EQUALIZATION    AND    COLLECTION  175 

The  act  of  1898  sought  to  increase  the  efficiency  of  the 
county  equalization  machinery  by  the  addition  of  two 
special  oaths.  Each  member  of  the  board  of  review  was 
to  take  the  following  oath  before  entering  upon  the  duties 
of  his  office  :^ 

I  do  most  solemnly  swear  (or  affirm)  that  I  will,  as  a  member  of  the 
board  of  review  of  assessments,  faithfully  perform  all  the  duties  of  said 
office  as  required  by  law ;  that  I  will  fairly  and  impartially  review  the 
assessment  of  all  property  as  made,  that  I  will  correct  any  and  all  assess- 
ments which  should  be  corrected;  that  I  will  raise  said  assessment  or 
lower  the  same  as  justice  may  require;  that  I  will  do  and  perform  all 
acts  necessary  to  produce  a  full,  fair,  and  impartial  assessment  of  all 
propertj'  of  every  kind,  nature  and  description. 

Further,  upon  the  completion  of  the  revision  the  mem- 
bers of  the  board  were  required  to  make  affidavit,  accord- 
ing to  a  set  form,  that  they  had  properly  completed  the 
work  to  which  they  had  pledged  themselves.^  *^ 

The  functions  of  the  county  board  of  review  may  be 
briefly  outlined  as  follows.  First,  it  may  add  property 
which  has  escaped  assessment.^^  Second,  it  may  correct 
individual  assessments,  in  such  manner  "as  shall  appear 
to  be  just''.  The  corrections  may  be  made  upon  complaint 
of  the  person  assessed  or,  under  the  act  of  1898,  upon  the 
initiative  of  the  board  itself.^^  In  case  it  is  proposed  to 
raise  the  assessment,  the  property  owner  and  the  assessor 
must  be  notified  and  given  an  opportunity  to  be  heard. 
Third,  tne  county  board  of  review  may  increase  or  reduce 
the  entire  assessment  of  either  real  or  personal  property  so 
as  to  equalize  the  assessment  between  sections  of  the  county 
or  between  the  classes  of  property.^^  Under  the  law  of 
1872  the  board  could  neither  reduce  the  assessment  below 
the  aggregate  valuation  as  made  by  the  assessors  nor  in- 
crease it  more  than  was  "actually  necessary."^*  But  the 
old  law  contained  a  provision  under  which  the  board  could 
set  aside  the  entire  assessment  and  order  a  new  one  made 
in  accordance  with  its  instructions.     Finally,  the  board 

»L.  1898,  p.  36. 

10/fcjrf.;  L.  1907,  p.  495.  * 

iiL.  1871-72,  pp.  24-5;  L.  1898,  p.  36  et  seq.;  L.  1905,  p.  360. 

12L.  1898,  p.  36  et  seq.;  L.  1905,  p.  360;  L.  1907,  p.  495- 

13L.  1898,  p.  36  et  seq.;  L.  1905,  p.  360. 

i*L.  1871-72,  p.  24. 


176  HISTORY  OF  TAXATION  IN  ILLINOIS  [176 

may  hear  and  determine  the  application  for  relief  of  any 
person  who  is  assessed  on  property  claimed  to  be  exempt 
from  taxation. ^^ 

To  aid  in  its  task  as  sketched  above,  the  board  is 
armed  with  power  "to  summon  any  assessor  or  any  deputy 
or  other  person  to  appear"  before  it  to  be  examined  under 
oath  as  to  the  correctness  of  the  valuations  returned  or 
the  methods  used  in  ascertaining  them.^^ 

After  the  review  is  completed,  a  set  of  the  assessment 
data,  with  the  corrections  entered,  is  returned  to  the 
county  clerk,  to  serve  when  equalized  as  the  basis  for  the 
levy  of  the  rates." 

State  Board  of  Equalization. 

After  the  review  by  the  county  boards  the  assessment 
is  equalized  by  the  state  board  of  equalization.  The 
origin  of  this  board  in  the  late  sixties  has  already  been 
discussed.  Its  powers  were  redefined  by  the  act  of  1872. 
Much  trouble  was  apprehended  from  the  extent  of  the  au- 
thority granted  to  this  body  but  little  has  been  actually 
experienced,  both  because  tlie  powers  granted  have  proved 
not  to  be  so  broad  as  expected  and  because  the  board  has 
shown  little  disposition  to  exercise  what  powers  it  has.^^ 

The  state  board  of  equalization  is  composed  of  one 
member  elected  from  each  congressional  district  for  a 
term  of  four  years  and  the  auditor  of  public  accounts.  At 
present  it  consists  of  twenty-six  members.^  ^  The  pay 
of  the  board  has  been  recently  changed  from  a  per  diem 
to  a  salary  basis.  Instead  of  five  dollars  per  day,  the 
members  now  receive  one  thousand  dollars  per  annum.^^ 

^^Ibid.,  pp.  24-25;  L.  1898,  p.  36;  L.  1905,  p.  36a 

18L.  1898,  p.  36  et  seq. 

^''Ibid.;  L.  1905,  p.  360. 

i^This  is  the  board  which  was  characterized  by  one  writer  as  "the 
grand  inquisitorial  and  confiscatory  office,  clothed  with  powers  and  func- 
tions which,  if  enforced,  would  have  produced  a  revolution  in  Austria  or 
Turkey!"  C.  J.  Bullock,  Readings  in  Public  Finance  (Boston,  1906), 
p.  206. 

^^L.  1871-72,  pp.  26,  27;  Proceedings,  1912,  p.  xcii. 

"L.  1871-72,  p.  30;  L.  1907,  p.  494. 


177]  REVIEW.    EQUALIZATION    AND    COLLECTION  177 

The  board  is  organized  by  selecting  one  of  its  members 
as  chairman  and  by  appointing  a  secretary.  The 
secretary  compiles  the  assessment  statistics  for  the  use  of 
the  board  and  prepares  their  report  for  the  press.  The 
board  meets  annually  on  the  first  Tuesday  after  the  tenth 
of  August  and  is  required  to  adjourn  finally  by  November 
first.2i 

The  board  has  power  to  increase  or  decrease  the  ag- 
gregate amounts  of  the  county  valuations  so  as  to  make 
the  assessment  in  one  county  bear  a  just  relation  to  the 
assessments  in  other  counties  of  the  state.  Since  1898  the 
total  amount  of  increase  or  decrease  by  the  board  may  not 
exceed  ten  per  cent  of  the  total  assessed  value  of  property 
in  the  state;  before  1898,  the  limit  except  for  railroad 
property  was  one  per  cent.^^  It  is  required  that  the  board 
consider  separately  the  following  classes  of  property  and 
calculate  equalization  percentages  for  them :  personal  prop- 
erty, railroad  and  telegraph  property,  lands  and  town  and 
city  lots.  Individual  assessments  are,  of  course,  not  taken 
up,  the  county  aggregates  for  the  various  classes  only  being 
considered.  To  form  a  basis  for  the  equalization  of  per- 
sonal property  the  board  is  required  to  calculate  the  state 
average  value  of  each  item  enumerated  on  the  schedule, 
to  compare  the  county  average,  and  to  use  the  result  in 
calculating  a  percentage  to  be  added  to  or  deducted  from 
the  county  assessment  of  all  personal  property .^^ 

After  the  board  has  determined  the  rates  of  addition 
or  subtraction  it  certifies  its  action  to  the  auditor  and  he 
forwards  the  equalization  data  to  the  various  county 
clerks.^^ 

Xo  one  seems  to  find  anything  worthy  of  praise  in  the 
state  board  of  equalization  except  its  direct  beneficiaries, 
the  members  of  the  board  themselves;  and  even  they  are 
often  far  from  unanimous  in  their  estimate  of  the  value 
of  the  machinery  of  which  they  form  a  part.    A  particu- 

2i/&trf.,  p.  495.  * 

22L.  1871-72,  p.  27;  L.  1898,  p.  36. 

23L.    1871-72,   p.  28. 

^*Ibid.,  pp.  29,  30. 


178  HISTORY  OP  TAXATION  IN  ILLINOIS  [178 

larly  virulent  attack  w  as  made  by  a  member  of  the  present 
board  late  in  1913  after  it  had  completed  its  work  for  the 
year.  He  charged  that  the  committees  to  which  the  work 
of  equalization  was  referred  met  seldom  and  performed 
their  work  in  a  hasty  and  perfunctory  manner.  "Political 
motives  entirely  control  the  actions  of  these  committees" 
is  his  testimony.  Not  only  are  they  influenced  "through 
fear  of  the  voting  tax-payers  to  make  no  changes",  but,  he 
charges,  they  are  also  disposed  to  discriminate  deliberately 
by  raising  the  assessment  in  the  district  of  a  particular 
member  "for  purposes  of  political  revenge,  to  teach  the 
member  a  lesson  that  he  will  be  less  active  in  public 
agitation  for  the  reform  of  our  iniquitous  taxing  system." 
"The  custom  has  been  to  never  raise  the  assessments  in  a 
county  unless  the  member  from  that  district  gives  his 
consent."  In  view  of  this  statement,  there  is  no  cause 
for  wonder  why  so  few  changes  are  made  by  the  board. 
The  meeting  of  the  committees  of  the  board  were  charac- 
terized as  "an  absolute  farce"  and  "a  perfect  burlesque."^^ 
On  the  whole  the  tempered,  calculated  statements  of 
the  official  commissions  seem  to  sustain  to  a  large  degree 
the  seemingly  rash  and  hasty  charges  of  the  pamphleteers 
against  the  efficiency  of  the  system.  The  revenue  commis- 
sion of  1886  characterized  as  "arbitrary  and  unjust"  the 
equalization  between  counties  by  the  state  board.^*^  The 
plan  of  adding  percentages  to  the  county  aggregates  was 
attacked  as  unfair  to  the  scrupulous  property  owner  who 
lists  his  property  at  its  full  value.  "Thus  upon  pieces  of 
property  already  assessed  at  a  large  fraction  of  their  value" 
the  report  says,  "frequently  an  increase  of  valuation  is 
made,  which  carries  them  above  their  market  value."^^ 
This  commission  saw  no  escape  from  the  evils  of  equaliza- 
tion except  by  segregating  the  sources  of  state  and  local 
revenue.  The  commission  of  1910  was  less  radical  and 
recommended  that  the  equalization  of  assessments  between 

20H,  T.  Nightingale  in  letters  to  The  Evansion  Press,  December  6, 
1913,  and  to  The  Chicago  Record-Herald,  November  25,  1913. 
'^'Report,  pp.  II,  12,  13. 
"Ibid.,  p.  iii. 


179]  REVIEW,    EQUALIZATION    AND    COLLECTION  179 

the  counties  be  made  a  function  of  a  permanent  tax  com- 
mission.^® The  present  board  was  styled  by  Professor 
Fairlie  "a  clumsy  and  ineffective  body."^^  Indeed  such  a 
conclusion  was  inevitable  in  face  of  the  evidence  of  the 
need  of  equalization  and  of  the  inactivity  of  the  board. 
Here  is  part  of  the  indictment.  "Since  1900,  the  state 
board  has  made  no  changes  in  the  local  assessments  for 
personal  property  (except  one  county  in  1907) ;  and  in 
1907,  1908  and  1909  no  changes  in  the  local  valuations 

for  lots Finally  in  1909  and  1910,  the  state  board 

has  not  made  a  single  change  in  the  local  assessments  of 
any  class  of  property."  In  1911,  again,  the  board  made 
no  changes  in  personal  property  assessments ;  and  in  1912 
the  sole  change  was  a  ten  per  cent  reduction  in  the  assessed 
value  of  the  lots  in  one  county. 

The  fact  that  the  board  is  a  representative  body  is  of 
itself  almost  enough  to  unfit  it  for  its  purpose.  The  theory 
seems  to  be  that  each  member  is  elected  to  protect  his  own 
district.  In  1895  Governor  Altgeld  charged  that  the  activ- 
ity of  the  board  was  "simply  an  effort  by  one  or  more 
sections  of  the  state  to  throw  the  burden  onto  some  other 
portion  of  the  state"  and  the  annual  struggle  of  the  mem- 
bers for  a  low  classification  of  their  counties  seems  to  bear 
out  the  governor's  charge.^*^  To  one  who  sees  no  force  in 
the  political  arguments  for  the  retention  of  the  state  board 
of  equalization  in  its  present  form,  it  seems  incompre- 
hensible that  the  board  should  continue  to  exist.  Almost, 
if  not  quite  as  expensive  as  a  small,  highly  skilled,  perma- 
nent commission,  obviously  inefficient  in  the  work  w^hich 
it  is  expected  to  do,  assailed  by  the  testimony  of  its  own 
members,  convicted  by  the  verdicts  of  both  of  the  expert 
commissions  to  which  the  legislature  has  appealed  for  ad- 
vice, the  board  still  is  able  to  retain  its  place  as  a  part  of 
the  tax  system. 


285".  J.,  47  G.  A.,  I  Sess.,  p.  184  et  seq. 
^^Fairlie,  Report  on  Taxation,  p.  66. 
305".  /.,  39  G.  A.,  I  Sess.,  p.  23. 


180  HISTORY  OF  TAXATION  IN  ILLINOIS  [180 

EXTENSION  OF  TAXES. 

When  the  state  board  has  finished  its  work  of  equaliz- 
ing the  county  assessments,  the  base  of  the  tax  is  at  last 
prepared  for  the  extension  of  the  rate.  In  Illinois  the  rate 
actually  levied  is  a  combination  of  state,  county,  city  or 
village,  road  and  bridge,  school  and  various  other  rates, 
the  amount  of  each  being  determined  by  the  proper  au- 
thority and  certified  to  the  county  clerk  who  combines  the 
rates  and  calculates  the  tax  which  each  property  owner 
must  pay.  The  various  taxing  bodies  are  usually  restricted 
in  the  rates  they  may  levy  by  constitutional  or  legislative 
regulations;  and  the  county  clerk,  when  calculating  the 
rate,  is  subject  to  the  limitations  of  the  Juul  law.^^ 

The  State  Tax, 

The  tax  for  state  purposes  forms  a  relatively  insignifi- 
cant part  of  the  total  rate.  Thus  in  1911  when  the  average 
rates  of  taxation  of  all  the  counties  in  the  state  was  $4.12 
on  each  one  hundred  dollars  valuation,  the  state  tax  was 
only  thirty-five  cents,^^  and  while  all  the  taxes  in  the  state 
amounted  to  |95,808,578.84,  the  tax  for  state  purposes  was 
but  18,305,799.73.  During  the  period  under  consideration 
the  state  rate  has  fallen  as  low  as  twenty-seven  cents  on 
the  one  hundred  dollars  (1879),  and  has  risen  as  high  as 
sixty-six  cents  ( 1897 )  and  seventy  cents  ( 1913 )  ;  but  these 
figures  mean  little  unless  taken  in  conjunction  with  the 
degree  of  undervaluation  present  in  those  years.  In  1913 
the  rate  was  levied  upon  a  legal  valuation  of  33  1-3  %  of 
the  cash  value  of  property ;  actually  the  valuation  was  con- 
siderably lower  than  33  1-3%.  The  high  rate  in  1913  is 
exceptional,  the  rate  in  1911  having  been  but  thirty-five 
cents  and  in  1912  but  thirty-eight  cents.  It  was  due  in 
part  to  increased  appropriations  and  in  part  to  a  failure 
to  levy  a  sufficiently  high  rate  in  1912.  A  newspaper  dis- 
pute has  arisen  between  ex-Governor  Deneen  and  Governor 
Dunne  over  the  question  of  the  responsibility  for  the  in- 

^^Infra,  p.  190  et  seq. 

^"^Aud.  Rep.,  1911-12,  pp.  199,  531. 


181]  REVIEW;,    EQUALIZATION    AND    COLLECTION  181 

adequacy  of  the  revenue  produced  by  the  1912  rate.  It  ap- 
pears that  only  enough  money  was  raised  to  meet  expenses 
through  June  30,  1913,  making  it  necessary  to  resort  to 
emergency  methods  to  get  funds  to  support  the  govern- 
ment until  the  collections  on  the  assessment  of  1913  should 
become  available,  in  the  spring  of  1914.  This  necessity 
and  the  inordinately  high  tax  rate  have  served  to  embarrass 
somewhat  the  new  administration.^^ 

During  most  of  the  period  the  state  tax  has  been 
strictly  an  apportioned  one.  In  the  early  history  of  the 
state  most  of  the  rates  were  specified ;  that  is,  certain  rates 
for  state  purposes  were  fixed  by  statute,  the  proceeds  from 
which  formed  the  sums  available  to  meet  state  expenses. 
Under  this  system  the  expenses  tended  to  be  accommodated 
to  the  income  rather  than  the  reverse.  But  since  1867 
the  state  legislature  has  first  made  its  appropriations  and 
then  directed  that  the  sum  necessary  to  meet  the  appropria- 
tions be  apportioned  among  the  counties,  so  that  each 
county  pays  a  pro  rata  share  according  to  the  value  of  its 
taxable  property.  The  governor,  auditor,  and  treasurer 
are  designated  in  the  revenue  law  as  a  committee  to  calcu- 
late the  state  rate  annually  on  the  completion  of  the  assess- 
ment and  equalization  of  property.^*  In  fact,  however, 
during  most  of  the  period  the  work  seems  to  have  been  done 
by  the  governor  and  auditor  alone,  the  act  passed  by  the 
succeeding  legislature  specifying  that  these  two  officials 
calculate  the  rate  required.^^ 

It  might  be  supposed  that  without  a  constitutional 
tax  limit  the  legislature  would  appropriate  unduly  large 
sums.  But  as  the  scheme  has  worked  out,  instead  of  the 
appropriations  being  made  without  reference  to  the  income 
expected,  they  have  been  very  strictly  controlled  with  a 
view  to  keeping  down  the  state  tax  rate.     The  responsi- 


^^The  Chicago  Tribune  and  The  Chicago  Record-Herald,  November  21, 

1913. 

3*L.  1871-72,  pp.  30,  31. 

35Froni  1871  to  1903  the  governor  and  auditor  were  the  only  officials 
designated.  Since  1903  the  treasurer  has  been  included  with  the  governor 
and  auditor. 


182  HISTORY  OF  TAXATION  IN  ILLINOIS  [182 

bility  for  the  rate  of  taxation  has  come  to  rest  very  largely 
upon  the  shoulders  of  the  governor  and  it  has  become  one 
of  his  functions  so  to  prune  the  appropriations  as  to  make 
the  state  rate  a  political  argument  in  favor  of  the  eflBciency 
of  his  administration.  It  is  a  question  whether  under 
this  system  the  best  interests  of  the  state  have  not  some- 
times been  sacrificed  to  political  necessity. 

As  its  formal  authorization  of  the  calculation  of  the 
total  state  rate,  the  legislature  passes  at  each  session  "An 
act  to  provide  the  necessary  revenue  for  state  purposes." 
In  the  first  place  this  act  specifies  that  a  sum  which  has 
varied  from  $1,500,000  in  1872  to  $10,600,000  in  19133«  be 
raised  for  general  state  purposes  to  be  designated  the 
^''Revenue  Fund."  All  through  the  period  this  part  of  the 
state  rate  has  been  an  apportioned  tax.  Next,  the  act 
directs  a  second  sum  to  be  raised,  called  the  "State  School 
Fund,"  the  amount  of  which  has  varied  from  |700,000  in 
ISTO^"^  to  13,000,000  in  lOlS.^^  This  part  of  the  tax  has 
.been  apportioned  since  1875,  a  lump  sum  being  substituted 
at  that  time  in  lieu  of  the  two  mill  tax  formerly  levied  for 
school  purposes.^ ^  The  act  for  raising  revenue  passed  in 
1872  included  a  provision  for  raising  $200,000  annually 
for  the  Interest  Fund,  but  the  necessity  for  this  soon  dis- 
appeared and  after  1874  no  levy  was  made  to  replenish  it. 
In  1911  the  legislature  took  a  step  away  from  the  appor- 
tionment plan  by  passing  an  act  authorizing  the  levy  of  a 
fixed  rate  of  one  mill  on  every  dollar  of  assessed  valuation, 
to  be  paid  to  the  treasury  and  set  apart  until  appropriated 
to  the  use  of  the  University  of  Illinois.*^  Although  this 
plan  reduces  the  flexibility  of  the  state  financial  adminis- 
tration, it  makes  somewhat  more  certain  a  uniformity  of 
support  for  the  university,  which  is  an  end  greatly  to  be 
desired.  At  times,  special  state  taxes  are  levied,  as  in 
1871  and  1872  when  a  levy  of  one  and  a  half  mills  was 

3«L.  1871-72,  p.  670;  L.   1913,  p.  512. 

8TL.  1879,  p.  254- 

88L.  1913,  p.  512. 

8»L.  1871-72,  pp.  31,  732. 

*°L.   191 1,  p.  484. 


183]  REVIEW^    EQUALIZATION    AND    COLLECTION  183 

authorized  for  the  "Canal  Redemption  Fund."*^  When  a 
total  rate  has  been  calculated  which  will  produce  the 
amounts  authorized  to  be  levied  for  state  purposes,  the 
auditor  certifies  it  to  the  county  clerks  who  extend  it  upon 
the  assessments  for  their  counties  as  revised  by  the  state 
board  of  equalization. 

Local  Rates. 
The  amount  of  the  county  tax  is  determined  each  year 
by  the  county  board.'^^  It  will  be  recalled  that  the  rate 
must  be  kept  within  the  constitutional  limit  of  seventy-five 
cents  on  the  hundred  dollars.  The  counties  may  go  above 
this  limit,  however,  by  special  vote  of  the  people  or  for  the 
payment  of  indebtedness  contracted  before  1870.*^ 

An  investigation  made  in  1913  by  Professor  Fairlie 
shows  that  the  constitutional  limit  is  not  always  ob- 
served.^*   He  states  that: 

in  191 1  the  rate  in  34  counties  was  less  than  45  cents,  the  minimum  being 
17  cents  in  Ogle  County.  In  18  counties  the  rate  was  the  full  45  cents, 
provided  under  the  Juul  law.  In  38  counties  the  county  rate  was  more 
than  45  cents  but  less  than  the  constitutional  limit  of  75  cents.  In  12 
counties  the  constitutional  limit  had  been  reached;  and  in  two  counties 
this  was  exceeded. 

The  authorities  of  "towns,  townships,  districts,  and 
incorporated  cities,  towns,  and  villages"  are  required  to 
certify  to  the  clerks  of  their  counties  the  amounts  which 
tliey  require  to  be  raised  by  taxation  each  year.'*^  To 
analyze  all  the  acts  delegating  the  taxing  power  to  these 
local  bodies  would  be  too  great  a  task.  In  1870  part  of 
the  municipalities  of  the  state  were  organized  under  spe- 
cial charters  and  part  under  the  general  incorporation  act. 
Consequently  there  was  a  great  variety  in  the  objects  for 

*iL.  1871-72,  p.  170. 

*^Ibid.,  p.  31 ;  L.  1909,  p.  325, 

^^Ibid.  Also  L.  1873-74,  p.  74;  Rev-  Stat.  1874,  p.  307.  Thus  by  an 
act  of  1907  a  county  tax  of  one  mill  in  addition  to  the  constitutional  limit 
was  authorized  for  the  establishment  of  detention  homes.  An  appeal  to 
the  voters  of  the  county  was  necessary 'for  the  levy,  however. 

^*Report  Prepared  for  the  Joint  Committee  of  the  Forty-Seventh 
General  Assembly  on  County  and  Township  Organisation,  Roads,  High- 
ways and  Bridges,  II,  103. 

*^L.  1871-72,  p.  31;  L.  1873-74,  P-  52. 


184  HISTORY  OF  TAXATION  IN  ILLINOIS  [184 

which  taxes  could  be  levied,  and  this  variety  still  obtains 
to  a  greater  or  less  degree.  Acts  extending  the  functions 
of  municipalities  and  permitting  the  levy  of  taxes  to  meet 
the  expenses  have  been  very  frequent  all  through  the 
period.  Authorizations  of  taxes  for  water-works,  sewage 
disposal  plants,  libraries,  public  hospitals,  parks  and 
boulevards,  tuberculosis  sanitariums,  bridges,  music  in 
parks,  etc.  etc.,  are  found  in  every  volume  of  session  laws. 
In  many  cases  the  laws  only  become  operative  upon  vote 
of  the  citizens,  so  any  calculation  of  the  rates  permitted 
would  be  a  useless  undertaking. 

In  the  early  years  of  the  period  there  was  considerable 
misunderstanding  as  to  whether  the  revenue  act  of  1872 
superseded  the  financial  provisions  of  the  various  special 
municipal  charters.  A  number  of  cities  and  towns,  in- 
cluding Chicago,  made  their  assessment  for  1872  under 
the  system  provided  in  their  special  charters,  and  acts 
passed  in  1873  legalized  such  assessments.^^  But  soon  this 
plan  was  declared  invalid  and  since  1877  "all  cities,  vil- 
lages, and  incorporated  towns,  in  this  state,  organized 
under  general  or  special  charters"  have  been  required  to 
assess  and  collect  their  taxes  under  the  provisions  of  the 
act  of  1872.^^ 

The  rate  of  taxation  in  cities  and  villages  is  subject  to 
several  checks.  Aside  from  the  debt  limit  of  five  per  cent 
imposed  by  the  constitution  upon  all  local  bodies,  which 
is  of  course  an  indirect  restriction  on  the  tax  rate,^^  the 
municipalities  are  required  by  an  act  of  1909  to  keep  their 
tax  rate  for  all  purposes  except  the  payment  of  debt  or 
interest  within  1.2%  on  the  equalized  assessment  for  the 
current  year.^^  In  certain  municipalities  the  rate  for  pur- 
poses other  than  schools  or  debt  payment  was  to  be  sixty 
cents  on  the  one  hundred  dollars  of  the  equalized  assess- 

*^Ibid.,  p.  45;  Rev.  Stat.  1874,  p.  254. 

*7The  People  ex  rel.  v.  Cooper  et  al.,  83  III.  585  (1876)  ;  L.  1877,  pp. 
S6.  61. 

*^ Supra,  p.  128. 

*^L.  1909,  p.  141.  The  act  excludes  municipalities  organized  under 
special  charters  which  permit  a  higher  rate. 


185]  REVIEW;,    EQUALIZATION    AND    COLLECTION  185 

ment  of  the  preceding  year.^^  There  had  been  no  specific 
tax  limit  before  1879  but  at  this  time  an  act  was  passed 
which  imposed  a  limitation  of  two^per  cent  for  all  purposes 
except  debt  payment.  Another  act  in  1881  made  the  limit 
one  per  cent  for  purposes  other  than  debt  payment  and  the 
support  of  schools.^^ 

Of  the  independent  boards  endowed  with  power  to 
levy  taxes,  those  in  charge  of  the  roads  and  the  schools  are 
the  most  important.  In  1911,  the  district  and  city  school 
taxes  charged  on  the  tax  books  amounted  to  nearly  seven- 
teen million  dollars,  and  the  road  and  bridge  tax  to  almost 
six  million.^^ 

The  complication  which  has  been  so  long  present  in 
the  road  taxes  due  to  the  two  ways  in  which  the  local  com- 
munities may  be  organized,  viz.,  as  township  or  county,, 
has  been  largely  eliminated  by  a  new  code  passed  in  1913.^^ 

Under  the  old  system  there  were  two  distinct  codes,, 
one  for  each  form  of  organization.  Counties  organized  by 
townships  had  the  option  of  a  labor  or  a  cash  system. 
This  w^as  not  true  of  the  other  counties;  they  could  only 
use  the  cash  system.^^  If  a  township  chose  the  cash  sys- 
tem, the  maximum  levy  was  thirty-six  cents.^^  On  the 
other  hand  if  the  township  chose  the  labor  system,  two 
taxes  were  levied;  the  road  tax,  payable  in  labor  if  desired, 
and  the  road  and  bridge  tax,  payable  only  in  cash.  It 
became  necessary  to  make  this  arrangement  in  1873  in 
order  that  a  certain  portion  of  the  tax  should  be  available 
in  cash  to  meet  the  expenses  of  salaries,  material  etc.  The 
maximum  levy  for  each  tax  was  twenty-five  cents  on  each 
one  hundred  dollars  of  valuation.^®    Labor  on  the  roads. 


^°Ibid.,  p.  142. 

"L.  1879,  p.  66;  L.  1881,  p.  59. 

^^School  taxes — $16,783,744.88;  road  and  bridge  taxes— $5,732,019.97.. 
Aud.  Rept.,  1912,  p.  193. 

^^L.  1913,  p.  520  et  seq. 

''^This  statement  does  not  take  the  ptoll  tax  into  consideration. 

^^^Formerly  this  rate  was  sixty  cents.    L.  1883,  p.  136;  L.  1909,  p.  333. 

s^Formerly  this  rate  was  forty  cents.  L.  1883,  p.  156;  L.  1903,  p.  304; 
L.  1909,  p.  335. 


186  HISTORY  OF  TAXATION  IN  ILLINOIS  [186 

was  until  1913  valued  at  |1.25  per  day;  from  1873  to 
1877  it  was  |1.50  per  day.  The  rates  given  were  not  ab- 
solute limits;  an  additional  rate  might  be  levied  by  spe- 
cial arrangement  when  deemed  necessary .^^  Moreover,  if 
money  was  still  needed  for  the  particular  purpose  of  pay- 
ing damages,  another  twenty  cents  might  be  collected.  A 
poll  tax  might  also  be  used  to  obtain  revenue.  This  re- 
source has  been  constantly  available  except  for  the  two 
years  1877-1879. 

Counties  which  had  not  adopted  the  township  form 
of  organization  could  levy  a  road  tax,  payable  only  in 
<;ash,  up  to  thirty  cents  per  one  hundred  dollars  of  valua- 
tion.^^ From  1887  to  1889  the  limit  was  one  dollar  and 
from  1889  to  1909,  fifty  cents.^^  But  as  in  the  case  of  the 
townships,  this  limit  was  not  rigid. 

Aside  from  all  other  road  taxes,  there  might  be  levied 
in  counties  of  both  classes  a  special  tax  of  one  dol- 
lar on  each  one  hundred  dollars  assessed  valuation  for 
the  construction  of  macadam  and  gravel  roads.  But  such 
a  tax  had  to  receive  the  sanction  of  a  majority  vote  of  the 
people.*'^  Similarly,  a  tax  of  one-half  of  one  per  cent  could 
be  lievied  in  counties  not  under  township  organization  to 
build  roads  upon  lands  subject  to  overflow.^^ 

The  new  general  codification  act  passed  in  1913®^ 
sweeps  away  the  illogical  and  confusing  distinctions  be- 
tween counties  organized  by  townships  and  those  with 
merely  the  county  form  of  organization.  Provision  is 
made  for  the  appointment  of  county  superintendents  of 
highways  in  all  counties.  For  all  road  and  bridge  pur- 
poses, road  districts  in  counties  not  under  township 
organization  were  made  coordinate  with  townships  in  other 
counties.  In  the  country  districts,  except  where  the  voters 
declare  against  it,  a  poll  tax  of  from  one  to  three  dollars 

"L.  1903,  pp.  303,  304;  ^.  1909,  pp.  333,  335- 

^^Ibid.,   p.  331- 

o«L.  1889,  p.  230. 

«oL.  1883,  p.  132;  L.  igos,  p.  369;  L.  1907,  p.  503;  L.   1909,  p.  327. 

«iL.  1899,  p.  340. 

*2L.  1913,  p,  520  et  seq. 


187]  REVIEW^    EQUALIZATION    AND    COLLECTION  187 

Is  levied,  payable  only  in  cash.  The  general  tax  levy  for 
road  and  bridge  purposes  is  restricted  to  61  cents  on  each 
one  hundred  dollars  of  taxable  property.  An  additional 
levy  of  twenty  cents  may  be  made  to  pay  damages  for  lay- 
ing out  roads  etc.  and  the  hard  roads  law  of  1909  is  re- 
tained.^^ 

The  importance  of  the  labor  element,  as  might  be  ex- 
pected, became  rapidly  insignificant.  In  1905  the  money 
value  of  the  labor  tax  was  only  about  one-tenth  of  the  total 
amount  spent  on  road  that  year.®*  In  1913  this  type  of 
payment  was  eliminated. 

The  taxing  power  of  the  board  of  school  directors®^ 
was  modified  by  the  law  of  1872,*^®  the  school  tax  for  ordi- 
nary expenses  being  limited  to  two  per  cent  of  the  assessed 
valuation.  Another  three  per  cent  was  available  for  build- 
ing purposes,  upon  vote  of  the  people.  In  1887  the  state 
superintendent  of  public  instruction,  under  the  direction 
of  the  legislature,  revised  the  school  laws  in  order  to 
-eliminate  their  "many  redundancies,  inconsistencies,  con- 
tradictions, and  incongruities."®^  But  the  new  general 
code  adopted  in  1889  preserved  the  former  tax  limits  of 
two  per  cent  for  ordinary  expenses  and  three  per  cent  for 
buildings.®^  These  limitations  were  extended  to  cities 
with  special  charters  in  1891.®® 

In  1898  and  1899  the  tax  limits  for  ordinary  expenses 
and  for  building  purposes  w^ere  changed  to  two  and  one- 
half  per  cent  each,'^^  and  by  a  law  passed  in  1909,  to  one  and 
one-half  per  cent,'^^  at  which  figure  they  now  stand.  Cer- 
tain cities  are  permitted  by  an  act  of  1913  to  levy  a  two 


^^Supra,  p.  1 86. 

^*Report  of  the  Illinois  Highway  Commission,  1906,  p.  15. 

^^Supra,  p.  120. 

86L.  1871-72,  p.  718. 

«7L.  1887,  p.  324.  "i 

88L.  1889,  p.  288. 

«9L.  1891,  p.  197. 

70L.  1898,  p.  36;  L.  1899,  p.  350. 

71L.  1909,  p.  394. 


188  HISTORY  OF  TAXATION  IN  ILLINOIS  [188 

per  cent  rate  for  educational  purposes  if  the  voters  agreeJ^ 
Taxes  for  township  high-schools  are  determined  by  town- 
ship boards  of  education  provided  by  an  act  of  ISSO."^^ 

Most  of  the  parks  in  Illinois  are  located  in  Chicago. 
Before  1872  they  were  controlled  by  special  acts  of  the 
legislature  but  after  the  adoption  of  the  constitution  of 
1870  the  form  of  the  park  laws  necessarily  became  general. 
But  in  spite  of  their  general  form  most  of  the  acts  are 
still  special  in  application.  Almost  every  bill  is  drawn 
with  some  particular  case  in  view  and  the  ingenuity  of 
the  drafters  is  exercised  so  to  shape  their  form  as  to  bring 
them  within  the  constitutional  requirements.  Conse- 
quently the  park  laws  are  a  maze.  Unless  one  is  very  fa- 
miliar with  local  conditions  it  is  often  impossible  to  tell 
from  the  evidence  in  the  statue  itself  what  they  mean, 
and  to  whom  they  are  intended  to  apply. 

Corporate  authorities  in  municipalities  have  long  been 
vested  with  power  to  maintain  parks,  but  a  general  law 
providing  for  the  formation  of  park  districts  and  the  elec- 
tion of  a  park  commission  with  general  powers  of  taxation 
seems  not  to  have  been  passed  until  1893.''^^  In  1885  boards 
of  park  commissioners  existing  by  virtue  of  various  special 
acts  were  empowered  to  levy  a  light  tax  on  property  to 
meet  certain  expenses.''^'^  But  park  districts  organized 
under  the  act  of  1893  were  to  be  supported  primarily  by  the 
general  property  tax.  No  tax  limit  was  fixed  in  the  original 
statue ;  and  no  restriction  was  placed  upon  the  debt  which 
might  be  contracted  until  1895,  when  it  was  placed  at  two 
and  one-half  per  cent  of  the  equalized  value  of  the  taxable 
property.^^  Another  general  park  law  passed  in  1895  per- 
mitted taxation  at  the  rate  of  four  mills  on  the  dollar.  ^^ 
In  1907  the  so-called  township  park  act  was  passed  which 
provides  for  a  one  mill  tax  on  property.'^* 

"L.  1913,  P-  585. 
"L.  1889,  p.  277. 
T<L.  1893,  p.  153. 
"L.  1885,  p.  226. 
"L.  189s,  p.  268. 
''''Ibid.,  p.  272. 
'«L.  1907,  p.  437. 


189]  REVIEW;,    EQUALIZATION    AND    COLLECTION  189 

After  the  adoption  of  the  constitution  of  1870,  drain- 
age legislation  also  assumed  a  general  form.  Numerous 
laws  were  passed  regulating  taxation  for  this  purpose. 
Some  of  the  money  is  raised  by  the  general  property  tax/^ 
the  law  in  force  at  present  permitting  a  two  per  cent  levy 
and  an  additional  three  per  cent  under  special  circum- 
stances. But  much  more  important  is  the  share  raised 
by  the  system  of  special  assessments.  It  is  usual  for 
drainage  projects  to  be  initiated  by  a  petition  of  property 
holders  and  after  the  assent  of  the  voters  of  a  district  has 
been  secured,  to  be  supported  by  a  levy  upon  the  property 
benefited,  sometimes  according  to  the  benefit  received, 
sometimes  according  to  the  value  of  the  property. 

The  latest  addition  to  the  ranks  of  special  boards  ex- 
ercising taxing  powers  is  made  by  acts  passed  in  1905  and 
1909  which  authorize  the  creation  of  forest  preserve  dis- 
tricts.^^ The  present  law  permits  a  tax  of  one  mill  on  the 
dollar  and  makes  the  debt  limit  one  per  cent  of  the  assessed 
valuation. 

The  Juul  Law. 

When  at  length  the  county  clerk  is  in  possession  of 
the  necessary  information,  he  proceeds  to  assemble  the 
rates  of  taxation  for  his  county.  He  has  already  entered 
into  the  collectors'  books  the  lists  of  the  taxable  property 
a.s  received  and  equalized.^^  The  state  rate  comes  to  him 
in  the  form  of  a  percentage  which  is  to  be  levied  on  the 
assessment  as  equalized  by  the  state  board.^^  The  county 
rate  is  also  already  calculated  when  it  reaches  the  clerk 
but  it  is  to  be  extended  upon  the  assessment  as  it  stands 
after  the  county  review  only.*^ 

The  officials  of  the  "towns,  townships,  districts,  and 
incorporated  cities,  towns  and  villages"  send  to  the  county 

''^L.  1889,  p.  125.    Also  an  act  of  1907,  entitled  "an  act  to  create  satt« 
itary  districts  in  certain  districts  subject  to  overflow."    L.  1907,  p.  289. 
80L.  1905,  p.  279.  L.  1909,  p.  245,    ' 
81L.  1871-72,  p.  32. 
82L.  1901,  p.  271. 


190  HISTORY  OF  TAXATION  IN  ILLINOIS  [190 

clerk  merely  the  amount  of  money  they  require  for  the 
ensuing  year,  and  it  is  part  of  his  task  to  calculate  the 
rate  upon  the  taxable  property  lying  within  their  respec- 
tive jurisdictions.  Here  also,  the  assessment  as  reviewed 
by  the  county  board  of  review  forms  the  base.®^ 

The  dangers  of  the  system  as  instituted  in  the  law  of 
1872,  by  which  there  was  no  coordination  or  control  of  the 
amounts  levied  by  the  various  taxing  authorities,  were 
pointed  out  by  the  revenue  commission  of  1886.^^  The 
property  owner  was  exposed  to  the  possibility  of  being 
taxed  at  the  rate  of  eight  per  cent  or  more.  No  discre- 
tionary power  was  placed  in  the  hands  of  the  county  clerk. 
His  function  consisted  merely  of  the  mechanical  task  of 
calculating  and  extending  the  rates.  There  was  no  one 
person  responsible  for  a  high  or  low  rate  of  taxation.  To 
prevent  taxes  from  becoming  unreasonable  a  provision  was: 
included  in  act  of  1898**  which  vested  the  county  clerk 
with  power  so  to  cut  down  the  amounts  asked  by  the  va- 
rious local  taxing  bodies  as  to  bring  the  aggregate  within 
reasonable  bounds.  As  the  result  of  amendments  made 
in  1901,  1905,  1909  and  1913,  the  section  designed  to  ac- 
complish this  purpose  has  reached  a  state  of  complexity 
which  can  be  appreciated  only  by  reading  the  text  itself. 
This  is  the  so-called  Juul  law : 

The  county  clerk  in  each  county  shall  ascertain  the  rates  per  cent 
required  to  be  extended  upon  the  assessed  valuation  of  the  taxable  prop- 

**Both  state  and  county  taxes  were  at  first  levied  on  the  assessment 
as  equalized  by  the  state  board.  L.  1871-72,  p.  33.  In  1879  "all  taxes 
levied  by  the  proper  authorities"  were  to  be  upon  this  base.  L.  1879,  p. 
246.  In  1881  a  change  was  made  back  to  the  old  arrangement,  L.  1881, 
p.  136,  and  it  was  not  until  1901  that  the  present  form  was  adopted  under 
which  only  the  state  taxes  are  levied  on  the  state  equalized  assessment 
and  all  other  taxes  upon  the  assessment  as  it  stands  after  the  county 
review.    L.  1901,  p.  271. 

^^Rcport,  p.  V. 

^^The  section  passed  in  1898  applied  only  to  Cook  County.  L.  1898, 
p.  36  et  seq.  The  aggregate  of  taxes  was  to  be  not  more  than  five  per 
cent,  except  for  state  and  for  school  building  purposes.  A  debt  limit  of 
two  and  one-half  per  cent  was  also  imposed.  This  section  was  held  to  be 
unconstitutional  on  the  ground  that  it  singled  out  Cook  County  and  was 
therefore  a  special  law.  Knopf  v.  People,  185  III.  20  (1900).  The  section 
was  reenacted  in  general  terms  in  1901. 


191]  REVIEW^    EQUALIZATION    AND    COLLECTION  191 

erty  in  the  respective  towns,  townships,  districts,  incorporated  cities  and 
villages  in  his  county,  as  equalized  by  the  State  Board  of  Equalization 
for  the  current  year,  to  produce  the  several  amounts  certified  for  exten- 
sion by  the  taxing  authorities  in  said  county  (as  the  same  shall  have  beeni 
reduced  as  hereinbefore  provided  in  all  cases  where  the  original  amounts- 
exceed  the  amount  authorized  by  law)  :  Provided,  however,  that  if  the. 
aggregate  of  all  the  taxes  (exclusive  of  state  taxes,  village  taxes,  levee- 
taxes,  school  building  taxes,  high  school  taxes,  district  school  taxes  and 
all  other  school  taxes  in  school  districts  having  not  more  than  100,000 
inhabitants,  road  and  bridge  taxes,  and  for  a  period  of  three  (3)  years, 
beginning  with  the  year  1913  taxes  levied  for  the  payment  of  the  principal 
of  and  the  interest  on  bonded  indebtedness  of  cities,  and  exclusive  of 
taxes  levied  pursuant  to  the  mandate  or  judgment  of  any  court  of  recor<f 
on  any  bonded  indebtedness),  certified  to  be  extended  against  any  prop- 
erty in  any  part  of  any  taxing  district  or  municipality,  shall  exceed  three- 
per  cent  of  the  assessed  valuation  thereof  upon  which  the  taxes  are  re- 
quired to  be  extended,  the  rate  per  cent  of  the  tax  levy  of  such  taxing- 
district  or  municipality  shall  be  reduced  as  follows:  The  county  clerk- 
shall  reduce  the  rate  per  cent  of  the  tax  levy  of  such  taxing  district  or 
municipality  in  the  same  proportion  in  which  it  would  be  necessary  to- 
reduce  the  highest  aggregate  per  cent  of  all  the  tax  levies  (exclusive  of 
state  taxes,  village  taxes,  levee  taxes,  school  building  taxes,  high  school 
taxes,  district  school  taxes  and  all  other  school  taxes  in  school  districts 
having  not  more  than  100,000  inhabitants,  road  and  bridge  taxes,  and  for 
a  period  of  three  (3)  years  beginning  with  the  year  1913  taxes  levied  for 
the  payment  of  the  principal  of  and  the  interest  on  bonded  indebtedness  of 
cities,  and  exclusive  of  taxes  levied  pursuant  to  the  mandate  or  judgment 
of  any  court  of  record  on  any  bonded  indebtedness),  certified  for  exten- 
sion upon  any  of  the  taxable  property  in  said  taxing  district  or  munici- 
pality, to  bring  the  same  down  to  three  per  cent  of  the  assessed  value  of 
said  taxable  property  upon  which  said  taxes  are  required  by  law  to  be 
extended :  Provided,  further,  that  in  reducing  tax  levies  hereunder  the 
rate  per  cent  of  the  tax  levy  for  county  purposes  in  counties  having  a 
population  of  over  300,000  shall  not  be  reduced  below  a  rate  of  forty  cents 
on  each  one  hundred  dollars  assessed  value,  and  in  counties  having  a 
population  of  less  than  300,000  the  rate  of  the  tax  levy  for  county  pur- 
poses shall  not  be  reduced  below  a  rate  of  forty-five  cents  on  each  one 
hundred  dollars  assessed  value,  and  the  rate  per  cent  of  the  tax  levy  for 
city  or  village  purposes  (exclusive  of  library,  school  and  park  purposes 
and  for  a  period  of  three  (3)  years  beginning  with  the  year  1913  ex- 
clusive of  the  taxes  levied  for  the  payment  of  the  principal  of  and  the 
interest  on  bonded  indebtedness)  in  citjies  and  villages  having  a  popula- 
tion of  over  150,000  shall  not  be  reduced  below  a  rate  of  one  dollar  and 
ten  cents  on  each  one  hundred  dollars  assessed  value,  and  the  rate  per 
cent   of   the  school  tax   for   educational  purposes   shall  not  be   reduced 


192  HISTORY  OP  TAXATION  IN  ILLINOIS  [192 

below  a  rate  of  one  dollar  and  five  cents  on  each  one  hundred  dollars 
assessed  value,  and  the  rate  per  cent  of  the  tax  levy  for  city  or  village 
purposes  (exclusive  of  library,  school  and  park  purposes,  and  exclusive 
of  the  taxes  levied  for  the  payment  of  the  principal  of  and  the  interest 
on  bonded  indebtedness)  in  cities  and  villages  having  a  population  of  less 
than  150,000  shall  not  be  reduced  below  a  rate  of  one  dollar  and  twenty 
cents  on  each  one  hundred  dollars  assessed  value,  and  the  rate  per  cent 
of  the  school  tax  levy  for  educational  purposes  shall  not  be  reduced  below 
a  rate  of  one  dollar  and  fifty  cents  on  each  one  hundred  dollars  assessed 
value,  but  the  other  taxes  which  are  subject  to  reduction  under  this  sec- 
tion shall  be  subject  only  to  such  reduction  respectively,  as  would  be 
made  therein  under  this  section  if  this  proviso  were  not  inserted  herein : 
And,  provided,  further,  in  reducing  tax  levies  hereunder  all  school  taxes 
levied  in  cities  exceeding  150,000  inhabitants,  with  the  exception  of  the 
levy  for  school  building  purposes,  shall  be  included  in  the  taxes  to  be 
reduced. 

The  rate  per  cent  of  the  tax  levy  of  every  county,  city,  village,  town, 
township,  park  district,  sanitary  district,  road  district,  and  other  public 
authorities  (except  the  state),  shall  be  ascertained  and  determined  (and 
reduced  when  necessary  as  above  provided),  in  the  manner  hereinbefore 
specified,  and  shall  then  be  extended  by  the  county  clerk  upon  the 
assessed  value  of  the  property  subject  thereto  (being  one-third  of  the 
full  value  thereof)  as  equalized  according  to  law.  In  reducing  the  rate 
per  cent  of  any  tax  levy,  as  hereinbefore  provided,  the  rates  per  cent  of 
all  tax  levies  certified  to  the  county  clerk  for  extension  as  originally 
ascertained  and  determined  under  section  one  of  this  act,  shall  be  used 
in  ascertaining  the  aggregate  of  all  taxes  certified  to  be  extended  with- 
out regard  to  any  reductions  made  therein  under  this  section:  Pro- 
vided, that  no  reduction  of  any  tax  levy  made  hereunder  shall  diminish 
any  amount  appropriated  by  corporate  or  taxing  authorities  for  the  pay- 
ment of  the  principal  or  interest  on  bonded  debt,  or  levied  pursuant  to 
the  mandate  or  judgment  of  any  court  of  record.  And  to  that  end  every 
such  taxing  body  shall  certify  to  the  county  clerk  with  its  tax  levy,  the 
amount  thereof  required  for  any  such  purposes. 

In  case  of  a  reduction  hereunder  any  taxing  body  whose  levy  is 
affected  thereby  and  whose  appropriations  are  required  by  law  to  be 
itemized,  may,  after  the  same  have  been  ascertained,  distribute  the 
amount  of  such  reduction  among  the  items  of  its  appropriations,  with 
the  exceptions  aforesaid,  as  it  may  elect.  If  no  such  election  be  made 
within  three  months  after  the  extension  of  such  tax,  all  such  items, 
except  as  above  specified,  shall  be  deemed  to  be  reduced  pro  rata.^'' 

'^The  law  as  it  stood  in  1909  differed  from  the  present  law  in  that 
^'district  school  taxes  and  all  other  school  taxes,"  etc.  were  not  included 
in  the  excluded  rates  and  that  the  taxes  for  bonded  indebtedness  in  the 
€xcluded  group  were  more  strictly  defined.    L.  1913,  p.  517;  L.  1909,  p. 


193]  REVIEW^    EQUALIZATION    AND    COLLECTION  193 

In  the  report  prepared  for  the  tax  commission  of  1910 
the  Juiil  law  is  criticized  because  it  is  so  "highly  compli- 
cated."^^ That  this  criticism  is  well  grounded  will  be  con- 
ceded upon  reading  the  law.  Even  the  officials  who  ad- 
minister it  often  fail  to  understand  it.  This  at  least  seems 
to  be  the  best  explanation  for  the  illegal  rates  extended 
so  frequently  in  Illinois.  Rates  above  the  limits  prescribed 
by  law  are  levied  annually  in  almost  every  county  of  the 
state,  and  railways  and  other  large  tax  payers  find  it  to 
their  advantage  to  employ  attorneys  to  investigate  the 
rates  levied  and  secure  abatements.  Mr.  John  N.  Wheatley, 
who  has  for  years  been  employed  by  a  number  of  rail- 
roads to  protect  their  interests  in  this  direction,  states 
that  on  the  average  about  five  per  cent  of  the  total  taxes 
assessed  in  Illinois  are  illegal  and  excessive  and  that  a 
deduction  of  this  amount  is  annually  obtained  by  the 
railroads.®^    Surely  this  a  strong  argument  in  favor  of  the 

323.  Moreover  the  amendment  of  1909  made  few  changes  in  the  law  as 
it  stood  after  the  revision  of  1905.  L.  1905,  p.  365.  District  school  taxes, 
which  had  been  included  among  the  taxes  excluded  from  reduction,  were 
now  omitted.  The  precentages  were  so  changed  as  to  accommodate  them 
to  the  new  assessment  basis  of  one-third.  The  bonded  indebtedness  limit 
was  made  six  per  cent  in  place  of  ten  per  cent;  the  tax  limit  three  per 
cent  instead  of  five  per  cent.  The  distinction  in  rates  between  counties 
and  cities  on  the  basis  of  their  population  was  new.  The  limit  of  reduc- 
tion for  counties  was  made  forty-five  cents  and  forty  cents ;  under  the  old 
law  it  was  sixty-five  cents.  TITe  limit  for  cities  was  reduced  from 
$1.80  to  $1.20  and  $1.10.  The  law  as  it  stood  after  the  amendment  of  1905 
differed  from  the  1901  law  only  in  that  it  contained  the  proviso  protecting 
the  city  and  county  rates  from  too  great  a  reduction.  L.  1901,  p.  272.  More- 
over, the  law  of  1901  made  it  the  duty  of  the  county  clerk  to  scrutinize 
the  taxes  certified  to  him  by  the  various  authorities  to  ascertain  whether 
they  exceeded  the  limits  provided  in  the  statutes.  In  any  case  where  the 
limits  had  not  been  respected  the  clerk  was  authorized  to  disregard  the 
excess  and  treat  the  residue  as  the  amount  certified  for  extension.  L. 
1901,  p.  272.  The  Juul  law  has  received  the  approval  of  the  state  supreme 
court.  The  People  v.  The  Chicago  and  Western  Indiana  Railroad  Co., 
£56  III.  388  (1912).  ' 

®^Fairlie,  Report  on  Taxation,  p.  16. 

s^This  estimate  was  kindly  furnished  by  Mr.  Wheatley  in  a  letter, 
dated  Oct  28,  1911. 


194r  HISTORY  OF  TAXATION  IN  ILLINOIS  [194 

creation  of  a  permanent  tax  commission,  which  could,  as 
a  part  of  its  duty,  at  least  make  sure  that  the  provisions 
of  the  law  were  understood  by  the  clerks  and  properly  ad- 
ministered by  them. 

After  the  rate  has  been  determined  the  clerk  enters  the 
amounts  of  the  taxes  due  in  the  collector's  book  and  gives 
the  collector  a  warrant  to  collect  the  taxes  and  to  pay  them 
over  to  the  officers  entitled  to  receive  them.^^ 

COLLECTION    OP   TAXES. 

The  administrative  machinery  for  the  collection  of 
taxes  had  been  quite  well  worked  out  by  1872,  and  the 
revenue  law  passed  at  that  time  has  been  but  slightly 
amended  since.  The  most  minute  details  are  specified  so 
that  this  portion  of  the  code  is  disproportionately  large 
in  respect  to  its  importance  for  the  purposes  of  this  study. 

Collectors. 

The  treasurers  in  counties  under  township  organi- 
zation and  the  sheriff  in  other  counties  are  the  ex-officio 
county  collectors.^^ 

Collections  are  made,  in  counties  with  townships,  by 
township  collectors,  elected  biennially,  and  in  other  coun- 
ties, by  the  sheriff. ^^ 

All  collectors  are  bonded,  township  and  district  col- 
lectors to  twice  the  amount  of  all  taxes  to  be  collected  by 
them  and  county  collectors  to  twice  the  amount  of  the 
state  tax  levied  in  their  county.®^ 

The  remuneration  of  the  collectors  has  through  the 
entire  period  been  on  a  fee  basis ;  the  fees  of  county  collec- 
tors vary  from  one  and  one-half  to  three  per  cent,  accord- 
ing to  the  population  of  the  counties,  the  highest  per- 
centage being  allowed  in  the  very  small  counties.  In 
counties  under  township  organization  the  collector  re- 

BOL.  1881,  p.  136. 

»iL.  1871-72,  p.  35;  Rev.  Stat.,  1874,  p.  455. 

*2L.  1871-72,  pp.  38,  39.    A  law  passed  in  1883  permitted  the  combi- 
nation of  the  offices  of  treasurer  and  township  collector.    L.  1883,  p.  174. 
»3L.  1871-72,  pp.  33-38,  59. 


195]  REVIEW^    EQUALIZATION    AND    COLLECTION  195 

ceives  a  smaller  percentage  as  a  commission  on  the  col- 
lections of  the  township  collectors.®^  The  township  col- 
lectors receive  two  per  cent  of  the  sums  collected  by  them 
as  their  compensation.®^ 

Collections  and  Settlements. 

After  the  collectors  have  received  from  the  clerks  of 
their  counties  the  tax  books  properly  filled  out,  with  a  war- 
rant attached,  they  proceed  to  collect  the  taxes,  the  town- 
ship collectors  being  required  by  law  to  call  at  least  once 
at  the  residence  or  place  of  business  of  the  property  owner, 
and  the  district  collector  to  advertise  through  newspaper 
and  posted  notices  where  and  when  he  will  receive  taxes.®® 
Actually,  however,  even  in  the  township  counties,  the  col- 
lector seldom  makes  personal  calls  to  collect  the  taxes,, 
relying  almost  entirely  upon  newspaper  and  post  card 
notices  to  bring  the  tax  payers  into  his  office. 

Each  month  the  township  and  district  collectors  pay 
to  the  proper  authorities  of  the  local  taxing  bodies  their 
collections  to  date.®^  At  the  same  time  they  pay  over  the 
county  and  state  taxes  to  the  county  collectors.  The 
county  collectors  report  monthly  to  the  county  treasurers 
(the  same  person  in  most  of  the  counties)  the  amount  of 
county  taxes  received  by  them  and  available  for  use.®^ 

At  the  end  of  the  collection  period  and  after  a  twenty 
day  notice,  the  town  and  district  collectors  are  required  to 
appear  before  the  county  collector  and  make  final  settle- 
ment of  the  collections  which  have  been  delegated  to  them.®* 
The  balance  of  the  money  collected  is  at  this  time  paid 
over  and  credits  are  allowed  for  delinquents.  The  county 
collector  is  expected  immediately  to  make  a  preliminary 
settlement  with  the  state  officials  for  the  state  taxes  and 

^*Ibid.,  p.  437;  L.  1877,  p.  105. 

95L.  1871-72,  p.  444.- 

^<^Ibid.,  pp.  33,  34,  35,  39;  L.  1873-74,  p.  52;  L.  1879,  p.  246;  L.  1881, 
p.  130;  L.  1898,  p.  36;  L.  1907,  p.  500;  L.  191 1,  p.  485. 

9^L.  1871-72,  p.  41 ;  L.  1873-74,  P-  52.  At  first  it  was  every  twenty- 
days.  * 

^^L.  1871-72,  p.  67. 

^^Ibid.,  p.  42.  L.  1873,  p.  52;  L.  1881,  p.  131.  These  amendments  va- 
ried the  date  for  the  final  settlement. 


196  HISTORY  OF  TAXATION  IN  ILLINOIS  [196 

then  to  turn  his  attention  to  the  delinquent  list.  After 
he  has  collected  all  the  delinquent  taxes  possible  he  pro- 
ceeds to  make  his  final  settlement  with  the  county  board,^**" 
and  with  the  state  auditor.^ "^ 

Tax  Lien  and  Tax  Sales. 

The  collection  of  taxes  is  enforced  by  a  lien  upon  the 
real  or  personal  property  assessed.  If  a  person  does  not 
pay  his  taxes  the  township  or  district  assessor  may  sell  his 
personal  property  to  make  good  the  amount.^  ^^  In  case 
taxes  are  still  unpaid  when  the  township  and  district  col- 
lectors make  their  final  settlement,  the  taxes  are  declared 
delinquent,  interest  is  charged  upon  them  and  application 
is  made  to  the  county  court  for  judgment  against  the  real 
estate  of  persons  with  unpaid  taxes.^*^^ 

The  application  of  the  tax  lien  to  real  and  personal 
property  is  somewhat  complicated.  Personal  property  is 
liable  for  taxes  levied  on  real  property  and  vice  versa. 
But  the  tax  on  personal  property  may  not  be  charged 
against  real  estate  except  in  case  of  removals  or  when  the 
tax  can  not  be  made  out  of  the  personal  property.  On  the 
other  hand,  a  tax  levied  on  real  estate  may  be  made  out  of 
personal  property  at  any  time  after  it  becomes  due.^*'^ 
In  actual  practice,  however,  the  collector  seldom  sells  per- 
sonal property  to  make  good  a  tax  on  real  estate;  indeed 
it  is  seldom  that  he  sells  personal  property  even  to  enforce 
the  personal  property  tax  itself,  contenting  himself  merely 
with  reporting  all  delinquencies  to  the  county  collector. 

After  a  five  day  notice  personal  property  may  be  sold 
for  taxes  by  collectors  at  public  auction.^  *^  The  procedure 
for  the  sale  of  real  estate  is  more  formal  and  involved.  The 
county  collector  must  advertise  in  the  newspapers  his  in- 
tention to  apply  to  the  county  court  for  judgment  against 

i<''*In  some  instances  this  is  done  through  the  county  clerk.    L.  1871-72, 
pp.  55-56. 

ioi/W(f.,  p.  57;  L.  1873-74,  p.  56. 

102L.  1871-72,  pp.  35,  39,  59;  L.  1873-74,  P-  52. 

103L.  1871-72,  pp.  43,  59;  L.   1873,  p.  52;  L.   1879,  p.  253;  L.   1881,  p. 


130. 


lo^L.  1871-72,  p.  59. 
^^^Ibid.,  p.  40. 


197]  REVIEW;,    EQUALIZATION    AND    COLLECTION  197 

the  real  estate  on  which  taxes  are  unpaid  or  which  is  owned 
by  persons  whose  personal  property  tax  is  unpaid.^  ^^  He 
must  also  advertise  the  date  on  which  he  intends  to  sell 
the  land.  The  collector  prepares  what  is  known  as  "the 
tax  judgment  sale,  redemption  and  forfeiture  record," 
entering  into  it  a  list  of  the  delinquent  lands  and  lots.^^''^ 
The  court  examines  this  delinquent  list  and  pronounces 
judgment,  directing  the  clerk  to  order  the  sale  of  the 
property.^  ^^  Any  time  before  the  day  of  the  sale  the  property 
owner,  by  paying  his  taxes  plus  the  interest  and  costs 
which  may  have  accumulated,  may  forestall  the  sale  of 
his  real  estate.^  ^"^  On  the  day  of  the  sale  the  collector  and 
clerk  carefully  check  up  the  delinquent  list  to  make  sure 
that  all  payments  are  entered  and  the  clerk  then  proceeds 
formally  to  order  the  sale  in  accordance  with  the  direction 
of  the  court.^^^ 

The  collector,  assisted  by  the  clerk,  then  offers  the 
tracts  for  sale  at  the  county  court  house.  Under  the  law 
as  originally  passed  the  sale  was  made  to  the  person  who, 
in  return  for  the  amount  due  in  taxes,  offered  to  accept  the 
least  quantity  of  the  tract.^^^  In  1895  this  was  changed  so 
as  to  make  the  successful  bidder  the  man  who,  for  paying 
the  tax,  would  agree  to  exact  the  least  percentage  of  pen- 
alty from  the  original  owner,  should  he  wish  to  redeem 
the  property.^  ^^  No  bid  of  a  penalty  exceeding  twenty-five 
per  cent  is  accepted.  In  practice,  most  of  the  sales  are 
made  at  this  figure.  A  record  of  the  sales  is  entered  and  a 
copy  forwarded  to  the  state  auditor.^  ^^ 


io«/&trf.,  pp.  44,  45 ;  L.  1873-74,  p.  SZ- 

"7L.  1871-72,  p.  46;  L.  1879,  p.  248. 

108L.  1871-72,  p.  47;   L.  1873-74,  p.  54. 

lo^L.  1871-72,  p.  46;  L.  1879,  p.  249. 

ii°L.  1871-72,  p.  48;  L.  1879,  p.  249. 

According  to  the  law  as  passed  in  1872  the  order  for  the  sale  of  the 
lands  was  given  by  the  court  on  the  dav  of  judgment.  By  the  amendment 
of  1879  the  land  was  not  ordered  to  be  sold  until  the  day  of  the  sale. 

^L.  1871-72,  p.  49. 

"2L.  189s,  p.  298. 

ii^L.  1871-72,  p.  50. 


198  HISTORY  OF  TAXATION  IN  ILLINOIS  [198 

Redemption. 

The  document  given  to  a  successful  bidder  at  a  tax 
sale  is  but  an  agreement  for  the  transfer  of  title  after  the 
redemption  period  of  two  years  has  passed.^  ^*  For  the 
first  six  months  after  the  sale,  the  redemption  conditions 
include  only  payment  of  the  amount  for  which  the  land 
was  sold,  plus  the  taxes  accumulated  since  the  sale,  with 
interest  and  the  penalty  bid  by  the  purchaser.  But  if 
the  redemption  is  deferred,  the  penalty  is  doubled  from 
the  sixth  to  the  twelfth  month,  trebled  from  the  twelfth  to 
the  eighteenth,  and  quadrupled  from  the  eighteenth  month 
to  the  end  of  the  period.  The  redemption  period  is  ex- 
tended in  the  case  of  property  belonging  to  minor  heirs, 
idiots,  and  insane  persons.^  ^'  If  at  the  end  of  the  period 
the  land  has  not  been  redeemed  and  the  prescribed  notices 
have  been  served  upon  the  owners  and  occupiers  of  the 
land,  a  deed  is  given  to  the  purchaser.^  ^®  But  the  deed 
must  be  taken  out  and  recorded  within  one  year  after  the 
redemption  period  has  expired  or  it  can  never  be  taken 
out  at  all.^^^  Moreover,  unless  the  holder  of  the  tax  deed 
takes  possession  of  the  property  w4thin  one  year  after  the 
date  of  his  deed,  the  original  owner  of  the  real  estate  may 
repay  him  his  money  outlay  and  receive  back  his  real 
^state.^^® 

Property  Forfeited  to  the  State. 

If  land  offered  for  sale  fails  to  find  a  purchaser  for 
lack  of  bidders,  it  is  forfeited  to  the  state.  The  following 
year,  if  the  taxes  are  still  unpaid,  the  land  is  again  offered 
for  sale  with  the  taxes  of  the  new  year  added  with  interest 
and  penalties.    In  cases  where  the  taxes  amount  to  a  sum 

"*L.  1895,  p.  109. 

^^'^Ibid.,  p.  258.  The  law  of  1872  originally  specified  twenty-five  per 
cent  as  the  penalty  to  be  imposed  during  the  first  six  months,  fifty  per 
cent  during  the  second,  seventy-five  per  cent  during  the  third,  and  one 
hundred  per  cent  during  the  fourth.    L.  1871-72,  p.  50. 

"8L.  1879,  p.  256. 

i"L.  1871-72,  p.  53- 

i"L.  1909,  p.  146. 


199]  REVIEW;,    EQUALIZATION    AND    COLLECTION  199 

larger  than  the  value  of  the  land,  the  land  is  sold  for  what 
It  will  bring^^^  and  the  amount  received  is  distributed  pro 
rata  among  the  taxing  authorities.  Lands  forfeited  to  the 
state  may  be  redeemed  by  paying  the  charges  against  it 
plus  various  fees  and  penalties.^ ^^ 

On  the  whole  the  machinery  for  the  collection  of 
taxes  seems  to  work  smoothly.  Until  recently,  except  for 
some  agitation  for  the  abolition  of  the  office  of  township 
collector,  there  has  been  little  manifestation  of  dissatis- 
faction with  the  system  in  vogue.^^^  During  1913,  however, 
the  delay  of  collectors  in  making  settlements  was  the 
source  of  considerable  complaint.  It  has  been  charged 
that  county  collectors  in  some  cases  delay  settlements 
with  the  state  auditor  in  order  to  put  out  the  money  at 
interest.  The  auditor  should  be  furnished  with  means  of 
forcing  prompt  settlements.^  ^^ 

119L.  i88i,  p.  137. 

120L.  1871-72,  p.  54;  L.  1879,  p.  254. 
i2iFairlie,  Report  on  Taxation,  p.  17. 
'^'^^Chicago  Tribune,  November  24,  1913. 


CHAPTER    XI 

The  Taxation  of  Corporations 

There  have  been  evolved  in  Illinois  a  number  of  spe- 
cial devices  to  assist  in  the  assessment  of  corporations. 
The  ordinary  methods  have  been  at  least  partly  discarded 
for  some  types  of  business  corporations,  for  banks,  for 
railroads,  and  for  telegraph  and  insurance  companies. 

THE  CORPORATE  EXCESS  PLAN. 

A  special  effort  was  made  under  the  law  of  1872  to 
reach  the  intangible  property  of  ordinary  business  corpo- 
rations. All  property  which  could  be  listed  in  the  ordinary 
manner  by  the  local  assessors  was  to  be  taxed  in  that  way, 
but  in  addition  a  special  assessment  was  to  be  made  by 
the  state  board  of  equalization.  The  framers  of  the  law 
seemed  to  believe  that  the  value  that  accrued  to  corpora- 
tions as  a  result  of  the  fact  that  the  state  had  granted  them 
the  right  to  do  and  to  act  was  a  value  that  could  not  be 
reached  by  the  local  assessors  using  the  ordinary  methods. 
In  order  to  reach  it,  it  was  arranged  that  the  value  of  the 
securities  of  the  corporation  should  be  taken  as  the  full 
value  of  the  concern  and  that  in  case  this  amount  ex- 
ceeded the  assessed  value  of  the  tangible  property,  the 
difference  or  corporate  excess  should  be  added  to  the  as- 
sessment roll  by  the  state  board  of  equalization.^ 

Corporations  subject  to  State  Assessment. 

Not  all  corporations  are  assessed  by  the  state  board 
under  the  corporate  excess  plan.  In  1875,  "companies  and 
associations  organized  for  purely  manufacturing  purposes 

^For  details  as  to  the  manner  of  assessment,  see  infra,  p.  202.  The 
discussion  of  the  taxation  of  corporations  is  made  more  brief  than  would 
have  been  done,  were  it  not  for  the  monograph  of  J,  R.  Moore  recently 
published,  entitled,  The  Taxation  of  Corporations  in  Illinois  since  1872^ 
University  of  Illinois  Studies  in  the  Social  Sciences,  Vol.  II,  No.  i. 

200 


201]  THE  TAXATION  OF  CORPORATIONS  201 

or  for  printing,  or  for  publishing  of  newspapers,  or  for  the 
improving  and  breeding  of  stock,"  were  released  from  as- 
sessment by  the  state  board.^  Companies  organized  for 
the  purpose  of  mining  and  selling  coal  were  excepted  in 
1893.^  These  acts  did  not  excuse  such  corporations  from 
all  assessment  on  capital  stock  and  franchise  values;  it 
merely  took  the  power  of  assessing  these  values  out  of  the 
hands  of  the  state  board  of  equalization.  But  this  was 
generally  construed  to  mean  complete  exemption.  In  1905, 
however,  the  legislature  went  further  and  specifically  ex- 
empted the  capital  stock  or  corporations  organized  "for 
purely  manufacturing  and  mercantile  purposes,  etc.,"  not 
only  from  assessment  by  the  state  board  of  equalization 
but  from  assessment  by  local  assessors  as  well.^  This 
move  of  the  legislature  was  promptly  blocked  by  the  courts 
in  a  decision  which  declared  such  exemptions  were  not 
authorized  by  the  constitution.^  The  assessment  of  the 
value  of  the  capital  stock  and  franchises  of  such  companies 
is  thus  thrown  back  upon  the  local  assessors;  the  capital 
stock  of  the  corporations  must  be  assessed  locally  or  not 
at  all.®  These  local  assessors  in  the  past  have  done  even 
less  than  the  board  of  equaliation,  to  reach  these  values, 
so  that  by  being  turned  over  to  them,  the  corporations  have 
little  to  fear. 

The  local  assessor  lacks  power  to  compel  the  corpora- 
tion to  give  information  necessary  for  a  proper  valuation. 
He  also  has  difficulty  in  many  cases  in  deciding  whether 
a  given  corporation  falls  under  his  jurisdiction  or  that  of 
the  board  of  equalization.     The  legal  test,  which  is  the 

2L.  1875,  p.  35. 

The  law  reads  that  they  shall  be  assessed  as  individuals.  In  1879  (L. 
1879,  P-  251)  the  exemption  was  made  more  distinct,  such  companies 
being  left  "to  be  assessed  by  the  local  assessors."  The  law  of  1879  was 
made  necessary  because  of  a  discussion  which  had  arisen  in  the  board  of 
equalization.     Moore,  op.  cit.,  pp.  65-66. 

^L.  1893,  p.  172. 

*L.  1905,  p.  353-  ' 

^Consolidated  Coal  Co,  v.  Miller,  236  III.  149  (1908)  ;  cf.  The  People 
V.  The  National  Box  Co,,  248  III.  141  (1911). 

8The  People  v.  Federal  Security  Co.,  255  III.  561  (1912), 


"202  HISTORY  OF  TAXATION  IN  ILLINOIS  [202 

purpose  expressed  in  the  corporate  charter,  is  often  a  very 
inaccurate  standard  of  the  kind  of  business  a  corporation 
is  actually  carrying  on.  The  situation  is  necessarily  pro- 
ductive of  much  friction  and  is  a  prolific  source  of  liti- 
gation. 

In  addition  to  the  companies  named  above,  homestead 
loan  associations  have  been  beyond  the  power  of  the  state 
l)oard  of  equalization  since  1891.'^  Moreover,  foreign  cor- 
porations are  not,  of  course,  taxed  in  this  manner.^  These 
•exemptions  leave  as  the  most  prominent  types  of  corpora- 
tions subject  to  the  board's  jurisdiction  in  this  particular, 
railroad,  telegraph,  gas  and  electric  companies  and  com- 
panies organized  for  loan,  insurance  (domestic),  bridge, 
•dredging,  hotel,  storage,  laundry,  amusement,  hardware, 
4ry  goods,  provision,  restaurant  and  dairy  purposes.^ 

The  framers  of  the  law  of  1872  decided  not  to  tax  to 
the  individual  owners  the  shares  of  the  stock  of  corpora- 
tions which  are  taxed  on  their  corporate  excess.  The  le- 
gality of  such  an  exemption  seems  to  be  doubtful. ^^ 

Assessment  Methods. 
To  enable  the  state  board  of  equalization  to  estimate 
the  corporate  excess  of  the  concerns  falling  under  its  juris- 
diction, it  is  provided  that  certain  information  be  supplied 
by  the  corporations  to  the  local  assessors  who  give  it  to 
the  county  clerk  to  be  forwarded  to  the  state  auditor  for 
the  use  of  the  board.  This  statement  of  information  must 
include  the  amount  of  the  capital  stock  of  the  corporation 
and  its  market  or  actual  value,  the  amount  of  the  funded 
<iebt,**  and  the  assessed  valuation  of  the  property  locally 
assessed. 

7L.  1891,  p.  89. 

*But  a  foreign  corporation  operating  a  domestic  corporation  under  a 
lease  must  return  statements.  Moore,  op.  cit.,  p.  20;  Postal  Telegraph 
•Cable  Co.  v.  Bernard,  J7  IH.  App.  105  (1890). 

*State  banks  organized  under  special  charter  rather  than  under  gen- 
eral law  were  assessed  on  corporate  excess  until  1893.    L.  1893,  p.  172. 

^"Moore,  op.  cit.,  pp.  103-104. 

^^More  specifically,  this  consists  of  the  total  amount  of  indebtedness, 
•except  the  indebtedness  for  current  expenses,  excluding  from  such  ex- 


203]  THE  TAXATION  OF  CORPORATIONS  203 

The  board  may  supplement  these  statements  with  in- 
formation from  other  sources.  By  rules  of  its  own  adop- 
tion,^^  it  estimates  the  value  of  the  securities  of  the  com- 
pany, equalizes  this  estimate,  sets  down  the  total  assessed 
value  and  compares  it  with  the  equalized  assessed  value 
of  the  tangible  property.  If  the  value  of  the  tangible 
property  is  not  so  great,  the  difference  is  added  and  taxed 
^s  capital  stock.  The  amount  of  this  excess  is  certified  to 
the  county  authorities  to  be  added  to  the  assessment  lists. 

Efficiency  of  Assessments. 

Great  difficulty  has  always  been  experienced  by  the 
state  board  of  equalization  in  securing  from  the  corpo- 
rations the  prescribed  information  about  their  capital 
stock,  funded  debt,  and  assessed  value  of  their  tangible 
property.  Even  when  successful  in  obtaining  them,  the 
reports  have  very  often  been  defective,  being  altered  in 


penses  the  amount  spent  for  the  purchase  or  improvement  of  property. 
L.  1871-72,  p.  11;  L.  1879,  p.  252;  L.  1905,  p.  353. 

^^The  rules  for  determining  the  value  of  the  capital  stock  of  corpo- 
rations have  been  changed  three  times  since  their  primary  adoption  in 
1873.  In  1900  radical  changes  were  made  but  were  declared  invalid  by 
the  courts  in  the  Teachers'  Federation  case.  Infra,  p.  206.  The  rules  in 
force  at  present  were  adopted  in  1909  but  differ  very  slightly  from  the 
ones  originally  adopted  in  1873.  They  provide  that  the  fair  cash  value 
of  the  shares  of  capital  stock  shall  be  determined,  "consideration  being 
g^iven,  among  other  things,  to  the  value  of  the  shares  of  the  stock  and 
the  quotations  of  such  shares  in  the  market  over  such  period  of  time  as 
may  be  reasonable,  also  the  books  of  said  corporations  and  the  returns 
made  to  the  auditor  of  public  accounts,  or  such  other  information  as  the 
board  may  have  or  be  able  to  obtain."  To  this  sum  shall  be  added  the 
amount  of  indebtedness,  except  that  for  current  expenses.  The  board 
shall  then  equalize  the  amount  "so  that  said  companies  or  associations 
ishall  be  assessed  as  near  as  practicable  upon  a  uniform  basis  with  other 
property  throughout  the  state."  From  the  aggregate  amount  so  deter- 
mined shall  be  deducted  the  assessed  and  equalized  valuation  of  the 
tangible  property  of  the  corporation  and  one-third  of  the  result,  if  any, 
is  taken  as  "the  assessed  value  of  the  capital  stock  of  such  corporation 
•or  association,  including  the  franchise,  over  and  above  the  tangible  prop- 
erty thereof."    Fairlie,  Report  on  Taxation,  p.  93. 


204  HISTORY  OF  TAXATION  IN  ILLINOIS  [204 

many  cases  with  a  view  to  reducing  the  corporate  excess. 
For  example,  when  the  law  first  went  into  effect,  many 
managers,  under  the  impression  that  the  debt  item  would 
be  used  to  offset  the  valuation  placed  on  the  capital  stock, 
expanded  the  amount  of  their  debt.  But  such  doctoring 
had  an  effect  exactly  opposite  from  that  expected.  Instead 
of  being  used  as  an  offset,  the  bonded  debt  was  added  to 
the  stock  to  secure  the  total  valuation  for  the  corpora* 
tion.^^  Needless  to  say,  as  soon  as  what  was  being  done 
became  known,  doctoring  of  this  particular  kind  came  to  a 
sudden  hajt. 

Neglect  or  refusal  to  report  still  persists.  The  pen- 
alty provided  in  such  cases  is  light  enough  to  be  ignored. 
When  the  report  is  not  furnished  by  the  corporation,  the 
assessor  is  supposed  to  make  it;  many  times  he  does  not. 
Sometimes  the  county  clerks  do  not  bother  to  transmit 
such  reports  as  have  been  gathered  by  the  assessors  in 
their  counties;  in  1900  the  clerks  in  more  than  half  the 
counties  in  the  state  neglected  to  do  so.^*  During  the 
early  years  the  board  held  special  hearings  and  sum- 
moned before  it  the  officials  of  corporations  concerning 
whose  affairs  information  was  desired.  But  before  long 
it  was  found  that  no  power  rested  in  the  board  to  compel 
the  attendance  of  representatives  of  corporations;  under 
these  conditions  it  was  found  idle  to  continue  the  examina- 
tions. Nothing  has  been  done  in  the  past  thirty  years 
toward  giving  the  board  this  power. 

Recognizing  that  undervaluation  exists  in  the  assess- 
ment of  all  other  kinds  of  property,  the  state  board  of 
equalization  feels  that  it  is  compelled  to  undervalue  the 
stocks  and  bonds  reported  to  it.  If  uniformity  in  the  as- 
sessment, as  provided  by  the  constitution,  is  to  be  attained, 
it  is  difficult  to  see  what  other  procedure  could  be  followed. 
But  it  can  be  followed  only  by  sacrificing  the  requirement 
of  the  revenue  law  which  calls  for  a  fair  cash  valuation. 
However,  the  undervaluation  of  this  type  of  property  was, 

**Moore,  ap.  cit.,  p.  24. 

^*Pro.  St.  Bd.  Eq.,  1900,  p.  17. 


205]  THE  TAXATION  OF  CORPORATIONS  205 

in  a  sense,  recognized  by  the  laws  of  1898  and  1909^^  which 
prescribed  that  the  assessed  valuation  of  all  property 
should  be  placed  at  a  fraction  of  its  cash  value.  Since  this 
time,  as  undervaluation  has  been  carried  still  further,  the 
board  has  endeavored  to  keep  on  approximately  the  same 
level  as  the  local  assessors. 

TABLE  i8. 
Assessments  of  Corporate  Excess  by  the  State  Board  of  Equalization, 

i873-i9i2.(a) 
Net  Assessed  Value  of        Number  of  Corporations 

Capital  Stock  Assessed 

1873  $20,730,057  206 

1874 11,719,216  224 

1875  4,802,112  100 

1880  2,179,460  29 

1885  3,791,623  114 

1890  6,956,909  314 

.       1895  4,782,509  27s 

1900(b)  4,808,630  334 

1 901  21,477,943  749 

1902 22,705,627  1988 

1903  15,116,104  1520 

1904  13,032,412  1442 

1905  12,942,970  1218 

1906  12,665,601  1832 

1907  10,608,000  1302 

1908  18,683,448  1281 

1909  35,394,441  "68 

1910 30,265,148  2154 

191 1  ..- 30,568,450  930 

1912  27,734,277  780 

(a)  Compiled  from  Pro.  St.  Bd.  Equal,  and  Fairlie,  op.  cit.,  p.  224, 

(b)  Original  assessment. 

The  actual  work  of  assessing  the  corporate  excess 
falls  to  one  of  the  committees  of  the  board,  the  capital  stock 
committee,  and  the  activity  of  the  board  as  a  whole  is  lim- 
ited in  practice  to  approving  the  report  of  this  committee. 
It  is  only  in  the  rarest  cases  that  any  change  is  made  in 
the  committee  reports.  The  other  members  of  the  board 
seldom  know  what  is  being  d6ne  by  the  capital  stock  com- 
mittee and  it  is  charged  that  their  votes  are  asked  in  ap- 

^'^Cf.  supra,  p.  103. 


20©  HISTORY  OF  TAXATION  IN  ILLINOIS  [20^ 

proval  of  the  report  without  adequate  time  for  them  to 
consider  the  justice  of  the  assessments  recommended.^^ 

Just  criticism  may  be  directed  toward  the  reports  of 
the  board.  They  vary  in  the  data  presented  from  year  to 
year  and  seldom  are  all  the  facts  presented  which  are 
essential  to  a  judgment  of  the  efficiency  of  the  assess- 
ment.^^ 

Table  18  shows  the  assessed  value  of  the  capital  stock 
of  corporations  other  than  railroads,  as  assessed  by  the 
state  board  in  the  years  given,  and  also  the  number  of  cor- 
porations found  to  have  a  corporate  excess. 

The  large  assessment  for  1873  has  already  been  partly 
explained  by  the  statement  that  much  bonded  indebted- 
ness was  reported  under  the  misapprehension  that  it 
would  be  used  to  offset  the  assessment  of  the  capital 
stock.  ^®  By  1877,  in  four  years,  the  assessment  had  shrunk 
from  $20,730,057  to  $1,605,783 ;  but  part  of  the  shrinkage 
is  accounted  for  by  changes  in  the  interpretation  of  the 
law  which  exempted  certain  companies  formerly  assessed. 

Teachers'  Federation  Case. 

The  great  increase  in  the  assessment  of  1901  was  due 
directly  to  the  interference  of  the  courts  as  the  result  of 
litigation  instituted  by  the  Teachers'  Federation  of  Chi- 
cago. In  1899  and  1900  the  work  of  the  schools  in  Chicago 
had  been  somewhat  hampered  by  the  lack  of  funds.^* 
What  was  most  to  the  point  was  the  announcement  by  the 
board  of  education  that  it  would  be  unable  to  carry  into 
effect  a  new  scale  of  salaries  for  the  teachers  which  had 
been  adopted  in  1898.  Looking  about  for  a  means  of  relief, 
the  Teachers'  Federation  investigated  revenue  conditions 
and  soon  uncovered  grave  abuses  in  the  assessment  of  prop- 
erty. The  assessment  of  corporate  excess  by  the  state 
board  of  equalization  was  chosen  as  the  most  promising 

I'Moore,  op.  cit.,  p.  45  et  seq. 

1  ^Evidence  on  this  point  may  be  found  in  Moore,  op.  cit.,  p.  45  et  seq., 
and  Fairlie,  op.  cit.,  pp.  61-63. 
^^ Supra,  p.  204. 
^*Chicago  Tribune,  Oct.  14,  1900. 


207]  THE  TAXATION  OF  CORPORATIONS  20T 

point  of  attack.  Here  a  large  increase  of  revenue  could  be 
hoped  for  without  antagonizing  the  general  public  by  an 
increase  in  the  tax  rates.  The  methods  of  the  board 
were  notoriously  lax  and  the  federation  found  little  trou^ 
ble  in  finding  specific  evidence  of  gross  errors  in  assess- 
ment. Twenty-three  public-service  corporations  were  cho-^ 
sen  for  attack  in  a  test  case.  It  was  claimed  by  the  teach- 
ers that  the  real  value  of  the  securities  of  these  companies, 
was  1268,108,312.  They  were  taxed  on  the  merest  fraction 
of  this  amount  by  the  local  assessors  and  yet  most  of  them 
were  assessed  nothing  at  all  on  their  corporate  excess  by 
the  state  board.  By  resorting  to  mandamus  proceedings; 
the  teachers  compelled  the  assessors  to  secure  the  assess- 
ment data  from  the  corporations,^*^  and  to  forward  them 
to  the  state  board  of  equalization.  Then  they  petitioned 
the  board  to  assess  the  corporations  on  their  corporate  ex- 
cess according  to  their  own  rules,  adopted  in  1873.^^  The 
board,  upon  receiving  legal  advice  to  the  effect  that,  as  a 
body  having  judicial  power,  it  was  not  forced  to  assess  the 
companies,  ignored  the  petition.^^  The  teachers  in  turn 
began  mandamus  proceedings  against  the  board.^^  But 
while  these  were  yet  under  way,  the  board  attempted  to 
circumvent  them  by  adopting  a  new  set  of  rules  for 
valuing  capital  stock  which  would  permit  it  to  give  the 
companies  light  assessments.  Under  these  rules  the  board 
assessed  seven  of  the  companies  about  twelve  and  one-half 
million  dollars  and  exempted  the  remainder.  The  man- 
damus proceedings,  however,  were  not  abandoned ;  but  the 
case  dragged  along  in  the  courts  for  some  months.  At 
length,  in  May,  1901,  a  decision  favorable  to  the  teachers, 
was  reached  and  the  board  was  directed  to  assess  the  cor- 
porations according  to  the  old  rules.  The  case  was  ap- 
pealed but  the  supreme  court  reaffirmed  the  position  of  the 
lower  court  and,  in  November,  1901,  issued  a  writ  of  man- 


ioc/, supra,  p.  202. 

^'^Cf.  supra,  p.  203. 

^^Chicago  Tribune,  Oct.  24,  1900. 

23/feirf.,  Oct.  28,  1900. 


208  HISTORY  OF  TAXATION  IN  ILLINOIS  [208 

damus  directing  the  reassessment  to  be  made.^* 

Dissatisfaction  with  the  reassessment  caused  the  case 
to  be  carried  to  the  United  States  courts.  Here  it  was 
held  that  the  new  assessment  had  not  been  made  on  the 
proper  basis,^^  because  the  property  of  these  corporations 
had  been  assessed  at  its  full  value  while  the  property  of 
other  corporations  had  been  undervalued. 

When  matters  were  finally  adjusted  the  companies 
paid  taxes  on  |21,034,000,  a  substantially  larger  sum  than 
that  on  which  they  had  been  assessed  at  flrst.^® 

2*State  Board  of  Equalization  v.  People,  191  III.  529  (1901;  Chicago 
Teachers  Federation  Bulletin,  Nov.  15,  1901. 

^^Chicago  Union  Traction  Co.  v.  State  Board  of  Equalization,  112 
Fed.  Rep.  607. 

^^Chi.  Teach.  Fed.  Bull.,  Nov.  22,  191 1;  Chicago  American,  Mar.  31, 
1912,  quoted  in  Bulletin;  Fairlie,  op.  cit.,  pp.  87,  88. 

The  tax  campaign  aroused  much  enthusiasm.  Once  started  in  the 
fight,  the  teachers  seemed  to  forget  the  first  cause  of  the  campaign  and 
they  came  to  feel  that  they  virere  angels  of  light  engaged  in  a  crusade 
against  the  forces  of  darkness,  the  "moneyed  corporations."  Articles  upon 
the  "moral  significance"  of  the  tax  litigation  appeared  in  the  Federation 
Bulletin  (see  issue  of  Oct.  7,  1902)  and  doggerel  like  the  following  sample 
served  to  inspire  the  teachers : 

The  Tax  War. 
The  Teachers'  Federation 

When  it  sought  to  right  a  wrong 
Was  well  aware  'twould  have  to  fight 
A  battle  'gainst  the  strong. 

They  spent  their  money  freely, 

Although  their  pay  was  small, 
To  compel  the  equalizers 

To  do  justice  unto  all. 

But  that  great  board,  unheeding. 

In  its  duty  still  is  lax. 
And  the  moneyed  corporations 

Escape  still  their  lawful  tax. 

Brave  hearts,  be  not  discouraged, 

For  when  the  fight  is  done, 
The  world  and  you  will  reap  the  fruit 

Of  victories  you  have  won. 
Chi.  Teach.  Fed.  Bull.,  Jan.  31,  1902. 


209]  THE  TAXATION  OF  CORPORATIONS  209 

After  a  substantial  increase  in  1909,  due  to  the  change 
in  the  legal  assessment  ratio  from  one-fifth  to  one-third, 
the  assessment  of  the  corporate  excess  has  once  more  begu  q 
to  decline.  Less  than  half  as  many  corporations  were 
assessed  in  1912  as  in  1902.  In  1912  only  an  even  dozen 
corporations  were  assessed  as  much  as  |100,000.  The  great 
majority  of  the  assessments  were  for  less  than  $5,000. 

Whatever  the  cause  of  the  inactivity  and  ineflftfciency 
of  the  board  may  be,  whether  it  is  corruption  as  charged 
by  the  Illinois  Tax  Reform  Association,^''^  or  its  clumsy 
size  and  negligence,  as  suggested  by  the  special  tax  com- 
mission^®  there  seems  to  be  little  excuse  for  retaining  the 
system.  Its  work  could  be  done  much  more  efficiently 
and  probably  more  economically  by  a  small  expert  body. 

RAILROADS. 

The  assessment  of  railroad  property  is  also  divided 
among  the  local  assessors  and  the  state  board  of  equal- 
ization, the  board,  in  this  case,  carrying  a  larger  share  of 
the  load.  Not  only  does  it  assess  the  corporate  excess  of 
railroad  companies  but  also  such  types  of  tangible  property 
as  are  difficult  for  the  local  officials  to  assess  in  a  satisfac- 
tory manner.  The  Illinois  Central  Railroad  forms  an 
exception  to  the  general  rule  of  assessment,  being  exempted 
from  ordinary  taxes  in  view  of  a  percentage  of  gross  re- 
ceipts which  it  pays  into  the  state  treasury  by  charter 
agreement.^* 

The  sections  of  the  revenue  law  providing  for  the 
assessment  of  railroad  property  have  remained  unamended 
in  any  particular  since  they  were  passed  in  1872.  They 
provide  that  the  proper  officials  of  the  railroad  shall 
teep  on  record  with  the  county  clerk  a  description  of 
the  property  in  the  county  held  by  the  railroad  as  its 
right  of  way,  the  length  of  all  main,  side,  and  second 
tracks  and  turnouts  lying  in  the  various  taxing  districts, 
and  the  value  of  improvements  and  stations  located  on 

^''Report,   1909,  p.  10. 

285".  /.,  47  G.  A,,  I  Sess.,  p.  184,  et  seq. 

2^Priv.  L.,   1851,  p.  71 ;  supra,  p.  io8  et  seq. 


210  HISTORY  OF  TAXATION  IN  ILUNOIS  [210 

the  right  of  way.  All  such  property  is  classed  as  real 
estate  and  is  designated  "railroad  track."^^  Annually 
each  railroad  must  make  statements  of  assessment  data 
to  clerks  of  the  counties  through  which  their  roads  run 
and  to  the  auditor  of  public  accounts.  The  statement 
which  goes  to  the  county  clerks  gives,  in  the  first  place, 
the  value  of  the  "railroad  track"  in  the  county,  and 
second,  the  value  of  all  the  "rolling  stock"  which  is  de- 
fined as  movable  property  belonging  to  any  railroad.  In 
addition  to  the  above  information,  the  statement  which 
goes  to  the  auditor  each  year  contains  data  on  the  type  of 
construction  of  the  road-bed,  the  character  of  the  improve- 
ments on  the  "railroad  track",  and  a  statement  of  the 
securities  of  the  company  similar  to  that  furnished  by 
other  corporations  taxed  by  the  corporate  excess  method.^  ^ 
The  auditor  turns  over  the  data  to  the  state  board  of 
equalization  which  assesses  the  roads  on  their  "railroad 
track",  their  "rolling  stock"  and  their  corporate  excess, 
and  distributes  the  assessed  value  among  the  local  com- 
munities in  the  proportion  that  the  main  track  lying  within 
the  boundaries  of  the  district  bears  to  the  total  length  of 
the  main  track  within  the  state.  The  only  exception  to  this 
apportionment  is  that  side  or  second  tracks,  turnouts  and 
buildings  on  the  right  of  way  are  taxed  in  the  district 
where  they  chance  to  lie.^^  All  real  estate  and  personal 
property  not  included  in  "railroad  track"  and  "rolling 
stock"  is  taxed  by  the  local  taxing  authorities  exactly  as 
other  taxable  property,  but  such  property  is  usually  incon- 
siderable in  amount. 

The  introduction  of  this  scheme  of  assessment  in 
1872  had  the  effect  of  increasing  five-fold  the  valuation  of 
the  railroad  property  in  the  state,  from  $25,568,784,  in 
1872,  to  1133,520,633,  in  1873. 

But  here  also  a  shrinkage  soon  appeared  which  be- 
comes evident  from  an  examination  of  Table  19,  which 

80L.  1871-72,  p.  13. 
^^ Supra,  p.  202. 
32L.  1871-72,  p.  14. 


211]  THE  TAXATION  OF  CORPORATIONS  211 

shows  the  total  equalized  assessment  of  railroads  for  the 
years  designated. 

TABLE  19. 
Total  Equalized  Assessment  of  Railroads,  1873-1912.(3) 

1873  „ $133,520,633 

1874 81,707,598 

1875 60,486,343 

1880 47,365,259 

1885  62>,0S2,7Z^ 

1890  75,310,524 

1895  „ 81,565,298 

1900  80,627,321 

1905  97,728,276 

1906  102,721,035 

1907  107,497,141 

1908  110,397,824 

1909  186,514,540 

1910 187,019,990 

1911  195,023,706 

1912 202,596,754 

(a)     Compiled  from  the  Proceedings  of  the  Illinois  State  Board  of 
Equalization  and  from  Fairlie,  Report  on  Taxation,  p.  218. 


The  low  level  of  |40,461,865  was  reached  in  1878. 
Since  this  date  the  assessment  has  pulled  slowly  but  fairly 
steadily  upward.  The  establishment  of  the  one-fifth  basis 
in  1898  made  no  perceptible  difference,  but  the  change 
to  the  one-third  basis  explains  the  rise  from  $110,397,824 
in  1908  to  1186,514,540  in  1909. 

The  year  the  law  of  1872  went  into  effect  the  board 
found  a  corporate  excess  for  the  railroads  amounting  to 
$64,611,071.  But  this  had  dwindled  to  about  ten  million 
in  1876  and  the  following  year  disappeared  entirely.  For 
the  succeeding  twenty  years  not  a  cent  was  assessed 
against  the  railroads  on  their  capital  stock.  Since  1901  a 
very  small  amount,  varying  from  approximately  one  to 
three  millions,  has  been  assessed  each  year,  almost  entirely 
a  result  of  the  Teachers'  Federation  eampaign.^^ 

Professor  Fairlie  in  his  report  to  the  tax  commission 
of  1910  commented  upon  the  injustice  of  the  method  of  ap- 

^^Supra,  p.  206  et  seq. 


212  HISTORY  OF  TAXATION  IN  ILLINOIS  [212 

portioning  the  assessment  according  to  the  length  of  main 
line  in  the  counties.  Complaint  has  been  particularly  bit- 
ter in  Cook  County  where  it  is  contended  that  the  greater 
value  of  the  property  lying  within  the  county  entitles  it  to 
a  larger  share  than  it  receives  under  the  mileage  system. 
It  was  suggested  that  the  railroad  taxes  afforded  a  possible 
source  of  state  revenue  in  case  it  should  become  desirable 
to  separate  the  sources  of  state  and  local  taxation.^* 

TELEGRAPH  COMPANIES. 

Telegraph  companies  organized  under  the  laws  of 
Illinois  are  taxable  on  their  corporate  excess.  The  law 
prescribes  that  statements  shall  be  made  annually  to  the 
auditor  giving  the  necessary  information  for  an  assess- 
ment. The  valuation  placed  upon  the  companies  is  ap- 
portioned among  the  counties  much  as  in  the  case  of  rail- 
roads, the  amount  assigned  to  a  particular  county  depend- 
ing on  the  length  of  line  operated  in  the  county  compared 
with  the  total  in  the  state.^'  The  tangible  property  of  the 
companies  is  locally  assessed. 

In  1872  an  attempt  to  assess  the  capital  stock  of  the 
Western  Union  Telegraph  Company,  a  foreign  corporation, 
was  blocked  in  the  courts.^^  Occasionally  an  Illinois  tele- 
graph company  is  assessed  a  small  amount  on  its  capital 
stock.^^ 

BANKS. 

Little  change  has  been  made  in  the  method  of  assessing 
banks  since  1867.^^  State  banks  organized  under  general 
law  were  not  made  taxable  under  the  corporate  excess 
method;  national  banks  could  not  be  so  taxed.  State 
banks  organized  under  special  laws  were  assessed  in  this 
manner  until  1893,  when  they  were  exempted.  Theoretic- 
ally, bank  stock  is  taxed  as  personal  property  to  the  stock- 

•^*Fairlie,  Report  on  Taxation,  pp.  75-76. 

3'^L.  1871-72,  pp.  16,  17,  29. 

3« Western  Union  Telegraph  Co.  v.  Lieb  et  al,  76  III.  172  (1874). 

'''Aud.  Rep.,  1912,  p.  364  et  seq. 

^^ Supra,  p.  117. 


213]  THE  TAXATION  OF  CORPORATIONS  213 

holders,  but  the  tax  is  in  reality  paid  by  the  banks,  a 
suflflcient  amount  to  meet  all  taxes  being  deducted  from 
earnings  before  dividends  are  paid  to  stock  holders.^^  In 
1872  a  change  was  made  which  withdrew  the  allowance 
formerly  made  in  the  assessment  for  real  estate  owned  by 
the  bank  and  assessed  in  the  regular  way.^^  This,  of  course, 
affected  chiefly  the  state  banks,  institutions  with  national 
charters  being  forbidden  to  hold  real  estate  as  a  form  of 
investment.  The  practice  of  allowing  deductions  for  real 
estate  seems  to  have  continued,  however ;  but  in  1903  when 
a  case  was  carried  to  the  supreme  court,  such  deductions 
were  declared  illegal.^ ^  But  the  state  legislature,  then 
in  session,  reenacted  the  provision  permitting  them,  the 
very  provision  against  which  the  decision  of  the  court  had 
been  directed.*^ 

A  feature  of  the  law  of  1872  was  section  thirty-five 
which  exempted  from  taxation  stock  owned  by  citizens  of 
Illinois  in  national  banks  located  in  other  states.*^  This 
was  the  only  way  that  double  taxation  could  be  avoided 
if  other  states  collected  at  the  source. 

The  blundering  manner  in  which  the  tax  legislation 
has  been  drawn  is  well  illustrated  by  the  changes  in  the 
provisions  for  taxing  state  banks  organized  under  special 
charters.  Such  banks  were  for  some  reason  made  taxable 
on  their  corporate  excess  rather  than  on  the  shares  of 
stock.  In  1893  the  legislature  exempted  them  from  tax- 
ation on  their  corporate  excess  but  neglected  until  1905 
to  make  the  proper  changes  in  the  other  sections  of  the 
revenue  law  whereby  they  could  be  taxed  on  their  shares. 
In  the  meantime  these  banks  were  taxed  by  neitlier  method. 

The  undervaluation  of  shares  of  bank  stock  has  kept 
I  pace  with  the  undervaluation  of  other  property   if  the 

39L.  1871-72,  pp.  12,  13. 
*°Ibid.,  p.  12. 

"Illinois  National  Bank  v.  Kinselja,  201  III.  31  (1903)- 
<2L.  1903,  p.  294. 

The    Illinois   Tax   Reform    Association    charges   graft    in   connection 
with  the  passage  of  this  measure.     See  Bulletin  32. 
*^L.  1871-72,  p.  12. 


214  HISTORY  OF  TAXATION  IN  ILLINOIS  [214 

evidence  of  the  Report  of  the  Bureau  of  Labor  Statistics 
is  to  be  given  weight.  Interesting  statistics,  which  are 
probably  more  trustworthy,  appear  in  the  protest  of  the 
Illinois  Tax  Reform  Association  to  the  board  of  review  of 
<Dook  County  in  1910.  Here  it  is  claimed  that  the  capital 
stock  of  thirty-nine  Chicago  banks  was  assessed  in  1909 
on  but  forty  per  cent  of  a  fair  legal  assessment.'^*  It  is 
also  contended  that  the  larger  banks  escape  with  a  lighter 
assessment  than  the  smaller  ones.  Statistics  are  presented 
which  show  that  the  stock  of  four  of  the  largest  banks  was 
assessed  at  figures  varying  from  twenty-four  per  cent  to 
thirty-five  per  cent  of  a  legal  assessment  value,  while  the 
rstock  of  four  of  the  smaller  banks  was  taxed  at  practically 
one  hundred  per  cent.*^ 

INSURANCE  COMPANIES. 

It  has  been  noted*^  that  domestic  insurance  companies 
^re  assessed  by  the  local  officials  on  their  property  in 
general  and  by  the  state  board  of  equalization  on  their 
corporate  excess.  The  origin  of  the  tax  on  the  receipts  of 
foreign  insurance  companies  has  also  been  treated.*^  The 
^cts  under  which  foreign  insurance  companies  have  been 
taxed  all  through  the  period  under  discussion  and  are  still 
taxed  were  passed  in  1869.  Foreign  fire,  marine,  and 
inland  navigation  insurance  companies  are  by  this  legis- 
lation made  taxable  on  their  net  receipts  at  the  regular 
general  property  tax  rates.*®  Net  receipts  have  been  de- 
fined not  as  net  profits,  but  as  gross  receipts  less  operating 


**Bull.  s^,  i^^-  Tax  Ref.  Ass.,  p.  i.  The  statistical  methods  used  in 
this  document  are  not  always  above  reproach,  as  for  example  the  manner 
in  which  general  averages  are  calculated  on  page  4.  But  nevertheless  the 
statements  seem  to  be  substantially  correct. 

*^Ibid.,  p.  4,  For  the  assessment  of  the  personal  property  of  bankers 
cf.  supra,  pp.  153  et  seq. 

*^Supra,  pp.  128,  202. 

*'' Supra,  pp.  117-118. 

*^L.  1869,  p.  209;  L.  1879,  p.  179.  The  former  law  had  taxed  gross 
receipts. 


215]  THE  TAXATION  OF  CORPORATIONS  215 

expenses  only.  Fire  losses  are  not  deducted.^®  In  addition 
to  this  tax  on  their  net  receipts,  foreign  fire  insurance  com- 
panies are  taxable  on  their  gross  receipts  up  to  two  per 
cent  by  the  local  communities  for  the  support  of  fire  de- 
partments.^'^  Such  a  tax  is  open  to  criticism  from  the  point 
of  view  of  justice.  It  amounts  to  a  special  charge  upon 
the  careful  man  who  insures  his  property  to  protect  from 
loss  the  careless  man  who  carries  no  insurance. 

Foreign  life  insurance  companies  were  released  in 
1869  from  the  tax  on  receipts  and  were  made  subject  to  a 
reciprocal  tax,  a  charge  which  depends  for  its  amount  upon 
the  attitude  in  matters  of  taxation  assumed  toward  Illinois 
by  other  states.^  ^  Foreign  casualty  companies  were 
brought  under  a  reciprocal  arrangement  somewhat  later.^^ 
Aside  from  a  few  fees,  the  statute  places  no  set  charge 
upon  these  companies  but  prescribes  that  the  auditor  shall 
ascertain  the  taxes  imposed  by  the  home  state  of  each 
insurance  company  upon  Illinois  insurance  companies 
doing  business  in  that  state.  The  amount  charged  against 
the  companies  by  the  Illinois  auditor  is  determined  by  what 
is  charged  by  the  home  state  against  similar  Illinois  cor- 
porations.    The  receipts  from  the  various  taxes  and  fees 

*9Moore,  op  cit.,  p.  84;  Republic  Fire  Insurance  Co.  v.  Pollack,  et  al., 
75  III.  292  (1874). 

SOL.  1869,  p.  228;  L.  1871-72,  p.  245;  L.  1903,  p.  221;  L.  189s,  p.  104; 
L.  1909,  p.  126.  An  act  passed  in  1877  specified  that  one-fourth  of  the 
receipts  from  this  tax  should  go  to  the  fund  for  the  relief  of  disabled 
policemen  and  firemen.  L.  1877,  p.  62.  The  fraction  was  raised  to  one- 
half  in  cities  over  10,000  in  1883.  L.  1883,  p.  59.  One-fourth  of  these  re- 
ceipts were  go  to  the  pension  fund  in  such  cities  by  a  law  passed  in  1901 
(L.  1901,  p.  97)  and  one-half  by  a  law  of  1905.  L.  1905,  p.  100.  In  1899  the 
state  superintendent  of  insurance  was  authorized  to  levy  a  two  per  cent 
tax  on  the  gross  receipts  minus  the  taxes  levied  by  the  local  authorities 
for  the  support  of  a  fire  department.  L.  1899,  pp.  265,  235.  This  act  was 
soon  declared  unconstitutional.  Raymond  v.  Hartford  Insurance  Co.,  196 
III.  329  (1902).  Finally  by  an  act  passed  in  1909,  all  fire  insurance  com- 
panies were  made  subject  to  an  additional  tax  on  their  gross  receipts,  the 
rate  not  to  exceed  one-fourth  of  one  per  cent,  for  the  support  of  the  office 
of  state  fire  marshal.    L.  1909,  p.  270. 

^'^L.  1869,  pp.  227,  228. 

5  2L.  1889,  p.  168;  L.  1899,  p.  237. 


216  HISTORY  OF  TAXATION  IN  ILLINOIS  [216 

levied  upon  insurance  companies  have  grown  to  consider- 
able proportions  in  late  years.  In  1895  the  total  receipts 
from  this  source  were  but  |177,503.73.  By  1900  they  had 
grown  to  1344,967.75.  The  receipts  in  late  years  have 
shown  still  greater  increases,  $1,178,695.41  being  the 
amount  for  the  biennium  ending  November  1,  1912.^^ 

In  addition  to  the  sources  of  revenue  enumerated 
above,  the  state  receives  considerable  sums  from  fees  and 
from  the  inheritance  tax.  For  the  biennium  ending  No- 
vember 1,  1912,  the  sum  of  |2,690,787.29  was  received  into 
the  state  treasury  from  fees  collected  by  the  various  state 
departments.^*  This  comprised  about  twelve  per  cent  of 
the  total  receipts  into  the  Revenue  Fund  for  this  period.^^ 
The  tax  on  inheritances  has  been  imposed  since  1895 ;  the 
law  was  revised  and  the  rates  increased  in  1909.  The 
biennial  receipts  during  this  period  have  varied  from  |39,- 
179.98  (1896-98)  to  $3,687,029.97  (1910-12).  The  yield 
for  the  biennium  ending  November  1,  1912,  is  decidedly 
unusual;  in  no  other  biennium  does  the  return  reach  one 
half  so  large  a  figure.  The  inheritance  tax  at  this  time 
supplied  about  one-sixth  of  the  income  of  the  Revenue 
Fund.  The  Illinois  Central  payments  have  already  been 
noted.'^^  These  are  at  present  the  only  richly  productive 
sources  of  state  revenue  aside  from  the  general  property 
tax. 

^^Reports  of  the  Insurance  Superintendent;  Auditors^  Report,  1912,  p. 
I,  and  Fairlie,  Report  on  Taxation,  p.  iii. 

8*This  sum  includes  the  sum  received  from  the  insurance  department. 
^^Aud.  Rept.,  1912,  p.  I ;  cf.  Moore,  op.  cit.,  ch.  5. 
^^Supra,  pp.  108  et  seq.,  209. 


CHAPTER    XII  , 

Summary  and  Conclusion  ' 

From  the  preceding  survey  it  is  difficult  indeed  to 
avoid  the  conclusion  that  the  general  property  tax  in 
Illinois  is  a  very  unsatisfactory  piece  of  fiscal  machinery. 
It  is  unequal  in  its  application,  unjust  in  its  incidence^ 
and  inefficient  in  its  administration.  Indeed  a  complete 
list  of  its  defects  would  include  infractions  of  almost  every 
commandment  in  the  fiscal  decalogue. 

Early  Success. 

To  give  to  the  system  the  modicum  of  praise  due  it  is 
a  simple  task.  An  examination  of  the  history  of  the  tax 
through  the  century  and  a  quarter  of  its  existence  makes 
it  evident  that  its  chief  claim  for  glory  rests  upon  the  fact 
that  for  the  first  two-thirds  of  that  period,  until  about 
1860,  it  was  on  the  whole  fairly  successful.  There  were 
complaints,  of  course,  but  a  tax  has  yet  to  be  devised  which 
can  be  applied  without  pain.  "It  is  impossible  to  make 
omelet  without  breaking  eggs."  Undervaluation  and  in- 
equality were  present,  it  is  true,  but  not  to  an  extent  which 
fatally  impaired  the  efficiency  of  the  system.  The  state 
owes  the  general  property  tax  a  debt  of  gratitude  for  its 
assistance  during  these  trying  years  of  debt  payment. 
During  the  early  forties  the  tax  system  seemed  unable  to 
bear  the  strain  put  upon  it;  but  no  system  of  taxation 
could  have  borne  so  great  a  burden.  There  was  available 
no  basis  upon  which  to  levy  the  heavy  taxes  demanded  by 
the  fiscal  necessities  of  the  state. 

The  causes  for  the  comparative  success  of  the  system 
before  1860  are  to  be  found  in  the  conditions  present  at 
that  time — conditions  which  have  now  largely  disap- 
peared. In  the  first  place,  the  general  property  tax  was 
satisfactory  when  property  in  general  was  tangible  and 

217 


218  HISTORY  OF  TAXATION  IN  ILLINOIS  [218 

undifferentiated,  and  when  it  formed  an  acceptable  crite- 
rion of  faculty,  or  ability  to  pay.  So  much  property  is 
now  intangible  and  unreachable  by  the  property  tax  that 
the  problem  is  entirely  changed.  Few  would  have  the 
temerity  to  maintain  that  present-day  tax  returns  in  Illi- 
nois form  an  acceptable  criterion  of  ability  to  pay.  In  the 
second  place,  the  rates  during  a  large  part  of  the  early 
period  were  trifling  compared  with  the  present-day  rates. 
Much  property  that  could  be  reached  when  rates  were  low 
can  not  be  reached  when  rates  have  become  high.  So  it 
appears  that  the  strength  of  the  general  property  tax  lies 
in  its  past,  and  that  its  success  depends  upon  conditions 
which  have  long  since  passed  away. 

Present  Defects. 

From  the  number  of  times  the  defects  in  the  general 
property  tax  have  been  pointed  out,  it  would  seem  super- 
fluous to  recount  them  here.  But  there  can  be  no  reform 
before  the  faults  of  the  system  are  thoroughly  appreci- 
ated ;  and  the  fact  that  they  have  not  been  fully  recognized 
and  appreciated  in  the  past  furnishes  the  only  excuse  for 
the  lack  of  action  thus  far  toward  remedying  the  situation. 
The  counts  of  the  indictment  are  these : — 

Thqre  is  gross  undervaluation}  In  the  examination 
of  the  entire  period  it  is  not  possible  to  find  a  time  when 
the  assessment  closely  approached  the  real  values.  This 
is,  of  course,  not  a  vital  defect  in  itself.  If  a  horse  is 
listed  at  twenty  dollars  instead  of  one  hundred,  and  all 
other  horses  are  listed  according  to  the  same  scale  of  de- 
preciation, the  rate  will  be  five  instead  of  one  per  cent  and 
the  farmer  pays  a  dollar  in  taxes  for  his  horse  just  the 
same.  But  the  defects  which  undervaluation  drags  in  its 
train  are  much  more  important — viz.  lack  of  uniformity 
and  universality. 

There  is  great  lack  of  uniformity.  When  one  assessor 
values  a  hundred  dollar  horse  at  twenty  dollars,  another 
may  value  an  equally  valuable  animal  at  ten  dollars.    The 

^Supra,  pp.  81-82,  83,  99-100,  112,  124,  133-134,  144,  167,  204,  215. 


219]  SUMMARY  AND  CONCLUSION  219 

scale  of  undervaluation  varies  widely  from  individual  to 
individual,  and  from  county  to  county,  so  that  uniformity 
is  completely  ignored  in  the  practical  working  out  of  the 
system.^ 

There  is  also  great  lack  of  universality.  Of  course  a 
man  who  is  taxed  on  a  lower  scale  of  valuation  than  his 
neighbor  is  in  a  sense  open  to  the  charge  of  having  evaded 
a  part  of  the  tax.  Thus  uniformity  is  implied  in  univer- 
sality. But  what  is  meant  primarily  when  the  term  uni- 
versality is  used,  is  the  degree  of  completeness  of  the  as- 
sessment. Is  all  property  in  the  state  taxed,  or  does  some 
escape?  Evidence  is  presented  in  the  foregoing  chapters^ 
which  proves  beyond  a  doubt  that  property  in  Illinois  es- 
capes taxation  to  an  extent  nothing  short  of  startling. 
Keal  estate  of  course  does  not  evade  the  assessment,  but 
:all  kinds  of  personal  property  do  to  a  considerable  extent 
and  intangible  personal  property  to  an  alarming  degree. 

The  admdmstrative  organization  is  defective.  The 
wretched  w^ork  of  certain  parts  of  the  administration  is  a 
matter  of  common  knowledge.*  Perhaps  the  most  ineffi- 
cient part  of  the  whole  organization  is  the  state  board  of 
equalization.  There  is  no  valid  excuse  for  the  further 
continuance  of  this  body.  There  are  many  administrative 
irregularities,  such  as  the  widespread,  illegal  extension  of 
rates  which  could  be  eliminated  by  a  small  expert  tax  com- 
mission. The  revenue  law  itself  is  unnecessarily  compli- 
cated and  obscure  and  is  consequently  difficult  to  admin- 
ister. There  is  considerable  complaint  about  the  system 
of  township  assessors  and  about  the  lack  of  promptness  in 
paying  over  collections  to  the  proper  state  officials.^ 

The  Necessity  of  Reform. 

Such  conditions  cry  aloud  for  amelioration,  but  com- 
plaints have  been  raised  so  long  and  so  continuously  that 
the  legislators  have  come  to  consider  them  normal  and 

^ Supra,  pp.  144,  169,  214. 
^Supra,  pp.  144,  205. 
*Supra,  pp.  132-133,  171,  174,  177- 
'^Supra,  pp.  171,  179. 


220  HISTORY  OF  TAXATION  IN  ILLINOIS  [220 

necessary.  For  forty  years  the  General  Assembly  has  been 
almost  impervious  to  suggestion.  Very  extraordinary 
measures  will  probably  be  necessary  to  bring  reform.  In 
the  late  seventies  there  was  a  movement  for  tax  reform 
whose  net  result  was  a  joint  resolution  of  the  legislature. 
The  revenue  commission  of  1886**  made  an  able  report  and 
drafted  a  new  revenue  law  with  many  admirable  features. 
But  none  of  their  recommendations  was  adopted.  The 
attacks  of  the  Bureau  of  Labor  Statistics  in  1894  and 
1896^  deserved  better  results  than  the  superficial  and 
makeshift  legislation  of  1898.  Finally,  the  moderate  and 
well-considered  recommendations  of  the  commission  of 
1910®  were  utterly  disregarded  by  the  legislature  which 
had  requested  and  paid  for  them. 

To  one  who  views  the  problem  from  a  distance  there 
is  an  element  of  the  pathetic  as  well  as  of  the  ludicrous  in 
the  situation.  The  ludicrous  element  is  found  in  the  atti- 
tude of  the  legislature  in  ignoring  the  recommendations 
of  experts  appointed  to  advise  them  and  in  persistently 
shutting  their  eyes  to  the  lessons  which  the  history  of  their 
own  state  and  of  other  states  and  countries  would  teach 
them.  The  pathetic  element  is  that  the  energies  of  the 
state  are  crippled  by  an  antiquated  and  unfair  financial 
system. 

The  state  has  reached  an  interesting  stage  in  the  evo- 
lution of  her  system  of  taxation.  Changes  of  a  more  or 
less  radical  nature  will  soon  be  made,  if  the  experience  of 
other  states  may  be  taken  as  an  indication  of  what  is  to 
be  expected  in  Illinois.  What  has  been  the  history  of  the 
system  elsewhere?  Professor  Seligman,  after  a  wide  sur- 
vey of  the  history  of  the  general  property  tax  in  many 
lands,  has  generalized  somewhat  as  follows:  The  system 
found  its  beginnings  when  economic  conditions  were  prim- 
itive and  when  the  needs  of  the  state  for  revenue  were 
such  as  to  demand  only  a  light  tax  rate.  The  tax  usually 
took  the  form  of  a  charge  levied  upon  enumerated  arti- 

^Supra,  pp.  157,  169,  171,  178,  190. 

''Supra,  pp.  169,  170,  214. 

^ Supra,  pp.  170,  171,  174,  178-179,  193,  209,  211. 


221]  SUMMARY  AND  CONCLUSION  221 

cles — a  tax  on  things  rather  than  a  tax  on  persons.  With 
the  progress  of  the  community,  the  amount  and  variety  of 
its  wealth  multiplied;  more  and  more  articles  were  added 
to  the  assessment  list  until  at  length  it  became  more  sim- 
ple to  make  the  tax  a  personal  one — to  tax  everyone  ac- 
cording to  the  value  of  all  the  property  he  owned  individ- 
ually rather  than  to  tax  the  specific  articles  themselves. 
But  soon  it  became  evident  that  intangible  personal  prop- 
erty played  a  very  insignificant  role  in  the  individual's 
estimate  of  the  value  of  his  taxable  property;  the  impor- 
tance of  this  class  of  property  annually  became  smaller 
until  the  attempt  to  reach  it  for  taxation  became  a  mere 
farce.  Then  the  law  was  so  changed  as  to  acknowledge 
frankly  what  Avas  already  known  to  be  true,  that  certain 
kinds  of  personal  property  were  not  assessable  under  tlie 
general  property  tax  system.  What  was  left  as  the  tax 
base,  after  this  change  was  made  in  the  code,  was  merely 
real  estate;  real  estate  usually  included  houses  but  even 
these  were  gradually  eliminated  from  the  assessment  lists, 
leaving  only  the  land.  So,  at  the  end  of  the  series,  there 
is  again  an  impersonal  tax  levied  on  a  specific  article.  The 
tax  paying  ability  represented  by  property  other  than  real 
estate  must  be  reached  by  other  methods  than  the  general 
property  tax.  Changes  in  the  system  usually  come  in  re- 
sponse to  changes  in  fundamental  economic  conditions. 
The  escape  of  personal  property  from  taxation  is  not  a 
serious  problem  in  the  primitive  stages  of  economic  devel- 
opment; there  is  not  enough  of  that  kind  of  property  to 
matter.  But  later  when  economic  conditions  have  changed, 
that  element  in  the  total  wealth  of  the  community  has 
increased  both  absolutely  and  proportionally.  At  the 
same  time  the  temptation  to  evasion  has  become  stronger; 
for  at  this  stage  in  the  process,  the  need  for  more  revenue 
usually  makes  itself  felt  and  the  higher  tax  rate  has  a 
tendency  to  frighten  away  intangible  property. 

The  earlier  stages  in  the  life  history  of  the  system  are 
clearly  discernible  in  the  history  of  taxation  in  Illinois. 
In  the  early  years  of  the  nineteenth  century,  the  cycle 


222  HISTORY  OF  TAXATION  IN  ILLINOIS  [222 

opened  with  a  tax  on  a  number  of  specific  articles.  From 
the  beginning,  the  tax  code  was  a  reflex  of  the  economic 
conditions;  there  were  at  first  but  few  kinds  of  property 
and  the  simplest  way  to  levy  the  tax  was  to  enumerate  the 
items  on  which  the  tax  was  to  be  made.  Gradually  more 
and  more  kinds  of  property  were  added  until  at  length  the 
tax  changed  its  character.  It  is  now  a  personal  tax ;  every- 
one is  taxed,  theoretically  at  least,  on  all  he  possesses,  not 
even  his  household  property  being  exempted.  Desperate 
attempts  have  been  made  to  prevent  evasion,  attempts 
which  have  excited  the  curious  amusement  of  tax  experts 
everywhere.  But  in  spite  of  every  effort,  personal  prop- 
erty taxation  in  Illinois  furnishes  one  of  the  best  examples 
extant  to-day  of  how  complete  can  be  the  failure  of  the 
general  property  tax. 

During  the  first  thirty  years  of  the  history  of  the 
state,  frontier  conditions  prevailed,  the  property  was  homo- 
geneous, the  demands  of  the  government  were  not  large, 
and  it  was  found  that  a  crude  and  primitive  form  of  tlie 
general  property  tax  suflQced  to  meet  the  needs.  During 
the  next  few  decades  the  necessity  arose  for  securing  a 
large  revenue;  but  by  wise  alterations  the  code  was  re- 
vamped so  as  to  meet,  fairly  successfully,  the  new  condi- 
tions. This  was  only  possible,  however,  because  the  prop- 
erty, to  a  large  extent,  was  still  tangible,  undifferentiated,, 
and  homogeneous.  It  is  only  in  the  last  forty  years  in 
Illinois  that  the  system  has  broken  down  badly.  Under 
the  stress  of  constantly  increasing  demands  for  revenue 
and  of  constantly  increasing  difficulty  in  discovering  and 
assessing  personal  property,  the  situation  lias  grown  pro- 
gressively worse  and  in  some  quarters  at  least  has  become 
almost  intolerable.  The  canons  of  universality  and  uni- 
formity, so  carefully  provided  for  in  the  state  constitution 
and  in  the  theory  of  the  code,  are  so  flagrantly  violated  in 
actual  practice  that  some  change  is  imperative. 

It  is  not  very  easy  to  explain  why  a  state  which  is  so 
far  before  its  neighbors  in  general  economic  development 
should  in  tax  matters  be  so  far  behind  almost  all  of  them. 


223]  SUMMARY  AND  CONCLUSION  225 

Among  the  reasons  for  this  backwardness,  the  first  place 
should  be  given  to  inertia.  The  legislature  has  shown  a 
persistent  reluctance  to  deal  with  the  problem.  It  was 
something  to  be  postponed  indefinitely,  to  be  buried  in 
committees  or  to  be  further  investigated  by  commissions^ 
but  not  to  be  taken  seriously.  Because  of  its  technical 
nature  the  subject  lends  itself  readily  to  treatment  of  this 
sort.  The  people  at  large  have  not  been  vitally  interested 
because  the  attention  of  many  of  the  most  able  and  influ- 
ential men  has  been  thus  far  almost  exclusively  occupied 
with  other  things,  problems  of  production,  for  the  most 
part.  The  enormous  economic  development  of  the  state 
has  operated  to  obscure  the  importance  of  the  injustices  of 
the  tax  system.  But  the  exploitation  period  is  now  well 
advanced  in  Illinois  and  this  cause  of  retardation  will 
become  constantly  weaker.  But  there  should  also  be  men- 
tioned a  more  sinister  cause,  one  which  is  spoken  of  only 
occasionally  in  a  radical  paper  or  pamphlet  of  a  radical 
society,  and  then  with  bated  breath.  It  is  suggested  that 
the  corporations  of  the  state  are  quite  well  satisfied  with 
the  present  state  of  affairs.    And  well  they  may  be.^ 

The  conflict  in  the  interests  of  the  various  sections  of 
the  state  also  serves  to  obstruct  tax  reform.  Illinois  is  a 
curious  mixture  of  the  primitive  and  the  modern.  Always 
rich  agriculturally,  it  has  of  late  years  developed  enormous 
commercial  and  industrial  wealth.  In  the  sections  of  the 
state  where  this  newer  development  has  taken  place,  tax 
reform  has  bseen  the  logical  step  for  many  years  past ;  it  is 
recognized  that  the  degenerate  form  of  the  general  prop- 
erty tax  is  no  fair  test  Of  the  ability  of  the  merchant,  the 
manufacturer,  and  the  mine  operator  to  contribute  to  the 
expenses  of  the  government.  In  the  agricultural  part  of 
the  state,  on  the  other  hand,  the  general  property  tax  has 
been  in  the  past  more  satisfactory.  Even  here,  there  are 
great  undervaluations,  evasions  and  inequalities,  but  com- 
paratively speaking  the  tax  'has  not  been  so  obviously  a 
failure.    To  the  local  officials  who  administer  the  law  in 


^Supra,  p.  203  et  seq. 


224  HISTORY  OF  TAXATION  IN  ILLINOIS  [224 

the  rural  districts,  the  assessment  list  is  a  fine  joke-book; 
but  the  situation  has  not  been  so  bad  as  to  be  particularly 
offensive  to  the  passerby.  The  crying  evils  come  largely 
from  the  different  economic  constitution  of  the  various 
parts  of  the  state.  The  sections  are  not  at  all  alike,  and 
they  demand  somewhat  varied  treatment  in  matters  of 
taxation.  But  all  concerned  seem  to  be  afraid  of  the  whole 
question.  The  business  interests  dread  any  change,  for  it 
is  likely  to  mean  an  attempt  to  get  nearer  to  their  true 
taxable  capacity  than  is  done  at  present,  and  they  feel  that 
almost  any  change  would  be  the  worse  for  them.  On  the 
other  hand,  the  agriculturists  lift  their  hands  in  horror  at 
the  thought  of  allowing  various  classes  of  property  to  be 
assessed  differently  or  taxed  at  different  rates.  They  still 
worship  the  Lares  and  Penates  of  their  fathers;  all  prop- 
erty must  be  taxed  according  to  its  value.  Exempt  mort- 
gages and  credits?  The  very  suggestion  is  alarming  to 
them.  It  is  a  trick  of  the  lawyers  for  the  city  interests  to 
make  even  heavier  the  load  of  taxation  for  the  farmer.  But 
they  forget  entirely  that  at  present  practically  no  mort- 
gages and  credits  are  actually  reached  in  the  cities.  They 
forget  also  that  the  proposed  constitutional  change  would 
make  it  possible  to  shift  some  of  the  heavy  burden  from 
real  estate  to  the  young  and  sturdy  shoulders  of  commerce 
and  manufactures  which  have  developed  and  grown  strong 
since  the  present  tax  system  was  formed. 

Suggested  Reforms. 

It  is  clear  that  something  should  be  done.  Tax  reform 
of  some  sort  must  come  and  come  quickly  if  the  state  is  to 
avoid  disastrous  consequences.  There  is  no  escape  from 
this  conclusion.  To  discuss  what  form  the  legislation 
should  take  is  not  strictly  within  the  province  of  this 
study.  It  is  believed,  however,  that  it  has  been  suflftciently 
demonstrated  that  the  general  direction  of  the  reform 
should  be  away  from  the  present  system.  Real  estate  will, 
of  course,  under  any  system  remain  the  most  important 
part  of  the  tax  base,  whether  the  state  shares  in  the  return 


225]  SUMMARY  AND  CONCLUSION  225 

from  the  land  tax  or  not.  But  the  history  of  taxation 
shows  that  any  attempt  to  rehabilitate  the  general  prop- 
erty tax  as  a  whole  is  destined  to  almost  certain  failure. 
No  method  devised  by  man  can  enforce  the  general  prop- 
erty tax  without  a  different  moral  sentiment  among  the 
people  than  that  which  now  exists.  It  is  possible  that,  if 
such  a  moral  sentiment  could  be  created  among  the  tax 
payers,  the  introduction  of  a  radical  administrative  reform 
would  result  in  the  listing  of  property  in  general  for  taxa- 
tion. But  granted  that  these  impossible  conditions  could 
be  met,  it  is  extremely  doubtful  whether  it  would  be  ad- 
visable to  bring  them  about.  For  property  under  the  coni- 
plicated  conditions  which  exist  to-day  is  coming  to  be  less 
and  less  trustworthy  as  an  index  of  faculty  or  ability-to- 
pay  and  income  is  becoming  more  and  more  satisfactory. 
Experience  elsewhere  has  revealed  better*  methods  of 
reaching  ability-to-pay.  Even  if  attainable,  the  ideal  of 
the  general  property  tax  would  to-day  not  be  worth 
reaching. 

It  may  serve  a  useful  purpose  to  enumerate  some  of 
the  measures  which  have  recommended  themselves  to  stu- 
dents of  the  problem  as  desirable  steps  toward  a  better 
taxing  system.  They  may  be  arranged  in  the  form  of  a 
series  of  gradations,  each  step  depending  upon  the  degree 
of  conservatism  of  the  reformer  in  question. 

( 1 ) .  Even  the  "standpatter"  could  scarcely  object  to 
a  proposal  to  codify  and  simplify  the  present  revenue  code. 
Even  if  no  changes  were  made,  the  codification  would 
doubtless  result  in  an  increased  efficiency  in  public  admin- 
istration in  general,  an  end  well  worth  striving  for. 

(2).  The  proposal  for  a  permanent  tax  commission 
should  arouse  no  considerable  opposition,  other  than  that 
of  the  politicians  who  would  resent  the  replacement  of  the 
state  board  of  equalization  and  of  the  corporations 
which  might  expect  less  liberal  treatment  under  some  new 
arrangement.  But  unfortunlately  this  type  of  opposition 
has  a  faculty  of  making  itself  very  effective.  Such  a  com- 
mission could  be  used  to  great  advantage  even  if  the  pres- 


226  HISTORY  OF  TAXATION  IN  ILLINOIS  [226 

ent  system  of  the  general  property  tax  were  retained  un- 
modified to  any  considerable  extent,  or  could  readily  be 
adapted  to  the  needs  of  any  more  fundamental  reforms 
which  it  might  seem  well  to  adopt.  The  plan  of  a  small 
expert  body  has  everywhere  proved  more  satisfactory  for 
this  particular  bit  of  administrative  work  than  a  large, 
elective  body  such  as  the  state  board  of  equalization. 

(3).  Little  can  be  done  in  the  way  of  more  thorough- 
going reform  until  the  hands  of  the  legislature  are  freed 
from  the  constitutional  restrictions.  The  constitution  now 
stipulates  the  general  property  tax.  But  the  legislature 
has  thus  far  shown  no  great  desire  for  freedom  of  action 
in  tax  matters.  There  is  slight  excuse  for  denying  the 
people  permission  to  express  themselves  upon  the  question 
of  the  advisability  of  giving  the  legislature  authority  to 
devise  some  new  system.  Distrust  of  the  legislature  may 
make  it  seem  desirable  to  incorporate  the  tax  system  into 
the  organic  law  of  the  state.  If  so,  the  sooner  a  constitu- 
tional convention  is  called,  or  amendments  providing  for 
specific  reforms  are  submitted,  the  better  it  will  be  for  the 
fiscal  health  of  the  community.  In  the  second  case  the 
legislators  will  merely  be  relieved  of  the  responsibility 
from  which  some  of  them  seem  to  shrink.  On  the  whole,, 
because  of  the  complicated  nature  of  the  problem,  it  would 
seem  the  wisest  plan  first  to  create  a  trustworthy  expert 
commission,  and  second  to  liberate  the  legislature  so  that 
it  could  adopt  its  recommendations. 

(4).  A  reform  which  has  proceeded  far  enough  in 
other  states  to  outgrow  the  stigma  which  attaches  itself 
to  any  new  proposal  is  the  separation  of  the  sources  of 
state  and  local  revenue.  As  has  been  seen,^*^  this  plan  is 
far  from  novel  in  Illinois.  During  the  early  years  of  the 
state's  history  an  upside-down  system  of  segregation  was 
actually  in  force  in  the  state,  the  proceeds  from  land  taxes 
going  to  the  state  and  from  personal  property  taxes  going 
to  the  localities.  The  revenue  commission  of  1886  was  the 
first  official  commission  in  the  history  of  the  country  to 
recommend  segregation  as  an  antidote  for  undervaluation 

^^Supra,  pp.  44,  178. 


227]  SUMMARY  AND  CONCLUSION  32T 

and  the  resulting  inequality.  If  the  state  were  to  resign 
the  mass  of  real  and  personal  property  to  the  localities  for 
taxation  and  depend  for  its  revenue  upon  various  "indi- 
rect" taxes  to  be  developed,  the  incentive  for  undervalua- 
tion would  be  in  part  removed.  It  would  then  be  possible 
for  a  single  locality,  if  so  minded,  to  proceed  to  the  work 
of  assessment  reform  unhampered  by  a  prospect  of  in- 
creased state  taxes  imposed  as  a  penalty  for  its  progress- 
iveness.  The  beneficial  results  achieved  in  New  York  City 
should  be  a  strong  argument  to  Chicago  in  favor  of  the 
adoption  of  such  a  system.  There,  real  estate  valuations^ 
have  risen  to  a  very  close  approximation  of  cash  values. 
By  a  system  of  tax  maps  and  unit  values,  inequality  is 
practically  eliminated.  There  can  be  no  doubt  of  the  good 
effect  of  such  a  measure  upon  real  estate  taxation.  But 
before  such  a  scheme  could  be  adopted  in  Illinois  a  consti- 
tutional amendment  would  be  necessary. 

(5).  If  the  state  were  to  resign  the  general  property 
tax  to  the  localities,  the  question  of  the  justice  of  the 
tax  would  still  remain  unsettled.  Separation  of  sources 
holds  great  promise  for  better  real  estate  assessments  and 
perhaps  some  promise  for  the  assessment  of  tangible  per- 
sonalty. But  it  offers  little  encouragement  to  the  seeker 
for  a  means  of  taxing  intangible  personal  property.  But 
most  of  this  property  is  not  reached  under  the  present 
system.^  ^  There  are  those  who  would  abandon  the  tax  on 
both  tangible  and  intangible  personal  property.  Substi- 
tutes which  would  certainly  be  more  satisfactory  than  the 
present  system  are  not  lacking.  For  the  tax  on  mortgages 
and  corporate  securities  a  recording  and  registry  tax 
might  be  supplied.  No  one  can  deny  the  superior  justice 
of  a  light  recording  tax  on  all  mortgages  over  a  heavy  gen- 
eral property  tax  on  the  unhappy  few  who  happen  to  fall 
into  the  assessors'  net  under  the  present  system.  A  series 
of  business  taxes  might  well  repace  the  present  levy  on 
stock  in  trade.  Unproductive  tangible  personalty,  such  as 
house  furnishings  etc.,  and  much  of  the  tangible  personalty 

^^Supra,  p.  146  et  seq. 


228  HISTORY  OF  TAXATION  IN  ILLINOIS  [228 

of  the  farmers  might  be  exempted  without  serious  conse- 
quences. 

(6).  The  policy  toward  the  taxation  of  corporations 
would  depend  so  largely  upon  the  disposition  made  of  the 
foregoing  suggestions  that  it  seems  idle  to  discuss  it  in 
detail  here.  It  may  be  well  to  point  out,  however,  that  for 
the  base  of  the  tax  upon  such  corporations  as  form  the 
bulk  of  those  now  assessed  by  the  state  board  of  equaliza- 
tion, the  best  opinion  seems  to  prefer  net  income  rather 
than  stocks,  bonds,  or  corporate  excess.  Any  advance  at 
all  in  corporation  taxation  almost  inevitably  presupposes 
the  expert  assistance  of  a  commission. 

Any  changes  should  be  made  gradually,  of  course. 
Many  persons  do  not  appreciate  the  extent  to  which  taxes 
are  capitalized ; — to  what  fine  degrees  the  various  inequal- 
ities, evasions,  and  discriminations  are  reflected  in  the 
values  of  the  various  kinds  of  property.  In  a  sense  things 
as  they  are  have  a  certain  right  to  be  simply  because  they 
do  exist  in  their  present  condition.  Much  property  is 
bought  and  sold  whose  value  would  be  entirely  different 
if  the  tax  laws  of  the  state  had  been  and  were  being  en- 
forced in  a  strict  and  eflflcient  manner;  and  often  both 
parties  to  the  transaction  buy  and  sell  in  entire  ignorance 
of  the  fact  that  the  values  in  which  they  deal  are  depend- 
ent upon  the  degree  of  badness  with  which  a  law  is  en- 
forced. Sudden  and  unheralded  changes  in  the  tax  code 
have  the  possibility  of  causing  much  injustice  and  suffer- 
ing through  their  very  suddenness,  even  though  the 
changes,  in  themselves,  be  thoroughly  desirable.  But  this 
is  no  reason  why  bad  conditions  should  always  be  bad. 
For  them  to  remain  so  suggests  cowardice  in  grappling 
with  the  problem.  Many  people  are  coming  to  believe  that 
it  is  high  time  that  changes  should  be  initiated  and  a  start 
made  toward  a  more  equable  and  more  efficient  revenue 
code  for  Illinois.  But  until  the  people  as  a  whole  reach  a 
state  of  mind  where  they  can  think  of  their  tax  problem 
witliout  being  incapacitated  for  action  both  by  fevers  of 
conscience  and  chills  of  apprehension,  no  reformation  can 
be  expected. 


BIBLIOGRAPHY  (a) 

Auditor  of  Public  Accounts  Reports  of,  1820-1912. 

Bureau  of  Labor  Statistics,  Reports  of,  1888,  1894,  1896. 

Census  of  the  United  States  (Various  volumes). 

Comptroller  of  the  Currency  of  the  United  States,  Reports  of  (Various 

volumes). 
Constitutions  of  Illinois,  1818,  1848,  1870. 

Constitutional  Conventions,  Journals  of,  1818,  1847,  1862,  1870. 
County  and  Township  Organization  and  those  relating  to  Roads,  Highways 

and  Bridges,  A  Report  of  the  Joint  Legislative  Committee  of  the  47th 

General  Assembly   Appointed  to  take  up  the   Matter  of   a   General 

Revision    of   the   Laws    Pertaining  to.     J.   A.   Fairlie,    Chief   Clerk. 

Springfield,   1913. 
Fairlie,  J.  A.,  A  Report  on  the  Taxation  and  Revenue  System  of  Illinois, 

prepared  for  the  Special  Tax  Commission.     Danville,  Illinois,  1910. 
Financial  Records,  Ledgers,  etc.     (In  the  vaults  of  the  Auditor  of  Public 

Accounts,  Springfield). 
General  Assembly,  Reports  to  the,  1836-1897. 
Governors'  Messages,  1818-1912. 
Highway  Commission,   State,   Report  of,   1906. 
House  Journals,  1818-1912. 
Illinois  State  Historical  Library, 

(i)   Publications  of. 

Number  2,  E.  J.  James,  Information  relating  to  the  Territorial 
Laws  of  Illinois,  Springfield,  1899. 

Number  3, ,  Territorial  Records  of  Illinois,  1809-1818. 

Springfield,    1901. 

(2)  Bulletin  of, 

Volume  I,  Number  2,  C.  W.  Alvord,  Editor,  Laws  of  the  Terri- 
tory of  Illinois,  1809-1811.  Springfield,  1906. 

(3)  Collections   of, 

Volume  II,  C.  W.  Alvord,  Editor,  Cahokia  Records,  1778-1790. 
Springfield,  1907. 


(a)  This  list  is  intended  to  include  only  official  publications  and  pri- 
mary sources.  Bibliographical  data  for  the  secondary  sources  are  given 
in  the  footnotes,  where  citations  are  made.  Information  in  regard  to  the 
form  of  publication  of  the  various  public  documents  is  given  in  such  detail 
in  Miss  Adelaide  R.  Hasse's  Index  of  Economic  Material  in  the  Docu- 
ments of  the  states  of  the  United  States,  Illinois,  1809-1904  (Published  by 
the  Carnegie  Institution  of  Washington,  July,  1909),  that  it  seems  unneces- 
sary to  repeat  it  here. 

229 


.230  HISTORY   OF  TAXATION   IN  ILLINOIS  [230 

Volume  IV,  E.  W.  Greene  and  C.  W.  Alvord,  Editors,  Gover- 
nors' Letter-Books,  1818-1834.     Springfield,  1909. 
Volume  V,   C.  W.   Alvord,    Editor,  Kaskaskia  Records,   1778- 

1790.     Springfield,  1909. 
Volume   VII,   E.    B.   Greene   and   C.   M.    Thompson,    Editors, 
Governor's   Letter-Books,    1840-1853.     Springfield,   191 1. 
Illinois  Tax  Reform  Association,  Reports  and  Bulletins  of,  1908,  1909,  1910. 
Kales,  A.  M.,  and  Liessman,  E.  M.  Compilation  of  Tax  Laws  and  Judicial 

Decisions  in  the  State  of  Illinois,  1910. 
Xaws: 

Laws  of  the  Governor  and  Judges  of  the  Northwest  Territory. 

Territorial  Laws  of  Indiana,  Governor  and  Judges. 

Session  Laws  of  Indiana,  Territorial  Legislature. 

Laws  of  Indiana  Territory,  Jones  and  Johnson  Compilation,  1807. 

Laws  of  the  Territory  of  Illinois,  1809-1811,  Bulletin  of  Illinois  State 

Historical   Library,  supra. 
Session  Laws  of  the  Territorial  Legislature,  1812-1818.     Some  laws 
for  this  period  are  unpublished  but  may  be  consulted  in   the 
office  of  the  Secretary  of  State  at  Springfield. 
Laws  of  the  Territory  of  Illinois  Revised  and  Digested   under  the 
Authority  of  the  Legislature  by  Nathaniel   Pope.     Kaskaskia, 
1815. 
Session  Laws  of  the  General  Assembly,  1818-1913. 
Revised  Statutes  of  Illinois  (Various  editions). 

Revenue  Laws  of  the  State  of  Illinois,  Auditor's  Edition   (Various 
dates). 
Moore,  J.  R.,  Taxation  of  Corporations  in  Illinois,  other  than  Railroads, 
since   1872.     University   of    Illinois    Studies   in   the   Social    Sciences, 
vol.  II,  no.  I,  1913. 
Revenue   Commission   Appointed   under   a   Joint  Resolution  of  the  34th 
General  Assembly  to  Propose  and  Frame  a  Revenue  Code,  Report  of, 
Springfield,  1902  Edition. 
Senate  Journals,  1818-1912. 
Special  Tax   Commission,   Report   of  the    (1910).     Senate  Journal,  47th 

General  Assembly,  First  Session,  p.  184  et  seq. 
Supreme  Court  Reports,  1831-1912. 
State    Banks,    Statements   Showing  the   Condition   of.   Compiled   by  the 

Auditor  of  Public  Accounts,  1889-1912. 
State  Board  of  Equalization,  Proceedings  of,  1867-1912. 
State  Treasurer,  Reports  of,  1820-1912. 

Swift's  Commission,  Report  of  Mayor,  in  Report  of  the  Bureau  of  Labor 
Statistics,  1896. 


VITA. 

The  author  was  born  in  Columbus,  Ohio,  on  October  3, 
1887.  In  1908  he  graduated  from  the  Ohio  Wesleyan 
University  with  special  honors  in  Economics,  having 
studied  under  Professor  L.  C.  Marshall  and  Professor 
G.  G.  Groat.  During  the  year  1908-1909  he  was  University 
Scholar  in  Economics  in  the  University  of  Illinois  and  in 
June,  1909,  received  the  degree  of  master  of  arts  from  that 
institution.  For  the  next  two  years,  1909-1911,  he  served 
as  private  secretary  and  research  assistant  to  Dean  David 
Kinley.  During  his  residence  in  Illinois  most  of  his  work 
was  done  under  the  direction  of  Professors  Kinley,  Robin- 
son, Bogart,  Green  and  Fairlie.  He  was  awarded  the 
Garth  Fellowship  in  Economics  in  Columbia  University 
for  the  year  1911-1912.  He  attended  the  lectures  of  Pro- 
fessors Seligman,  Seager,  Giddings ,  Simkhovitch,  Mussey 
and  Chaddock  and  the  seminars  of  Professor  Seligman  and 
Seager.  In  1912  he  was  appointed  instructor  in  Economics 
In  Columbia  University.  Since  1912  he  has  been  assistant 
editor  of  the  Political  Science  Quarterly. 


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